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Webinar: 5 Steps to Building Business Credit


Natalie: Hi everyone. My name is Natalie [Goriel
00:00:02] and I am the online media coordinator for the US Small Business Administration.
I would like to welcome you to today’s webinar. This webinar is made possible through our
public private partnership with Dun & Bradstreet Credibility Corp . We are really excited to
work with Dun & Bradstreet Credibility Corp because public private partnerships allow
the government and the private sector, to come together in support of the small business
community. It also allows us to hold free webinars like this on a variety of business
topics. In just a moment I will turn it over to the
D&B Credibility Corp Team, to walk you through the steps of building business credit, but
before I do that, I want to say a little bit about why SPA is so excited about this partnership.
We know that as small business owners and entrepreneurs, you need more of two things,
time and money. Our mission at SPA is to provide the nations 28 million small businesses with
the support they need, in a world where time and money are both short. We do this what
we call the three Cs. First, SPA provides capital for small businesses,
in the form of guaranteed loans to start expand export or recover after a disaster. We help
small businesses with government contracts, which is a hundred billion dollar market.
Finally, what brings us here today, is that SPA provides counseling services, often at
no cost. Many of you might be familiar with the SPA Resource Partner network, including
small business development centers, four mentors, s, women’s business centers, veteran business
centers, and our SPA field offices. I encourage you to visit spa.gov, to learn more about
what services and events you can find in our resource partner network.
In addition to the SPA resource partner network, we work with private companies to bring in
expertise in high priority areas like building business credit. We often hear that there
is confusion between personal credit versus business credit. Many people also don’t know
where to start when it comes to building business credit, and so through this partnership SPA
and Dun & Bradstreet Credibility Corp, plan to work small business owners like you through
the steps you should take to business credit. This is the first of two webinars with Dun
& Bradstreet Credibility Corp. The second will cover access to capital preparing to
meet your lenders next week. Due to the high demand, this webinar is sold out. However,
it will be available on SPA’s YouTube channel at YouTube.comsba in early May, along with
recording of today’s webinar. With that, I would like to turn it over to business credit
veteran Amber [Colie 00:02:58]. Amber: Thank you Natalie. Hello everyone,
my name is Amber Colie. I’m a director for Dun & Bradstreet Credibility Corp. I would
like to begin by mentioning how excited we are atDun & Bradstreet Credibility Corp, to
be able to be a part of this webinar and speak about such an important topic. Along with
SPA, we recognize how critical small businesses are to the overall economic health of our
nation. Small businesses are actually the background of our economy. There’s a catalyst
of change for our neighborhood and community development, and too often the small businesses
experience difficulty in access to capital that they need in order to startup or grow
their business. At Dun & Bradstreet Credibility Corp, we believe
it’s very important to help educate small business owners about business credit and
credibility, and also to help facilitate the process between the small business owner and
the means to affordable access to capital. In an effort to help educate and prepare small
businesses on their journey for growth, we want to help you better understand the five
steps to build a strong business credit profile. Next slide please.
Running a small business can be tough and demanding at times. We talked to thousands
of small business owners every day, through hundreds credit advisors calling and consulting
these owners about their business. These are the entrepreneurs who have the courage to
go for it. What we know is that their lessons and their experiences and their challenges,
and their successes are absolutely worth knowing about.
By using the most valuable lessons we’ve learned and sharing with those with you today, then
perhaps, if you are looking for ways to build your business credit, to get access to capital,
to grow your business, maybe those [new 00:04:40] employees or potentially role out that national
marketing campaign or expand operations in another area of the country, then hopefully
this presentation will help you along that path.
The things that we are going to cover today is, who are we? Who is Dun & Bradstreet Credibility
Corp? Why should you really care about your business credit? We want to outline for you,
actually how business credit work, and then we’ll walk through the concrete steps that
you can take to build your business credit. The important thing is, how important is business
credit in the day to day operation of a business. How important is having capital when you need
it. I can tell you that as a small business owner
this is more than likely one of the many things that are keeping you up at night. I’ll give
you an example. The other day I was taking my oldest daughter to school, and we stopped
by a small coffee shop in our hometown. This is a drive thru coffee shop on a main thoroughfare
through town. Great coffee, not a franchise. Probably two or three employees in the business
at most. As the owner was taking the orders and preparing
the coffee, I mentioned how much I loved his little shop and appreciated his coffee. Then
I stated, “I really wish you would also go open up another shop on the other side of
town so I don’t have to go out of my way to actually frequent your coffee stores.” He
said, “You are right, I would love to get another shop over there.” He mentioned many
of his customers had also put in the same request. He said at that point, “I would love
to do that, but in order to do that, I need a few suitcases full of money, and another
employee, just like myself, that I can afford.” Without that, he’s unable to expand his business.
If you are a small business owner, you could probably relate to this gentleman and the
issues that he is facing in order to grow his business. Next slide please. Who are we?
Dun & Bradstreet Credibility Corp is the leading provider of credit building and credibility
solutions for businesses. Dun & Bradstreet Credibility Corp was founded in 2010 when
it purchased and licensed certain assets related to Dun & Bradstreet Credibility Corp [inaudible
00:06:40] self awareness solutions business. Dun & Bradstreet Credibility Corp operates
as an independent business from D&B. Dun & Bradstreet Credibility Corp offers credibility and credibility
and credibility solutions for businesses. We are actually headquartered in Los Angeles,
California, but we have offices throughout North America. Dun & Bradstreet Credibility
Corp provides monitoring solutions available to companies looking to monitor and impact
their own business credit profile. Our credit monitoring products are used by hundreds and
thousands of companies, interested in helping to protect our business reputation.
Additionally, we do offer D&B solutions, which help you gage potential business risks of
both credit and credit worthiness of the companies that you do business with. Next slide please.
As a good starting point, let’s talk about a company’s credit worthiness and some of
the ways that credit worthiness is actually determined. What you see in the diagram is
an outline of what’s called the four Cs of credit. Before anyone would lend you money,
they want to carefully review your ability to pay them back, according to the terms and
conditions that are set. Especially in tough times, but even when things are going well,
they still want to review the following four items.
We’ll begin with character. Character is most often demonstrated by your prior financial
history, as a person or a business. What type of credit history have or does your business
have? Have you paid your bills late? Do you currently have any accounts that are delinquent?
What’s the total amount of debt that you currently have? Have you used all of the credit that
was available to your business? These factors are a good indicator of your
financial character moving forward. It’s often said that your past performance can oftentimes
be a good indicator of future performance when it comes to meeting your financial obligations.
Next, capital. Capital is simply referring to the capital assets of your business. Lenders
can consider capital and determine your credit worthiness. For example, if you are a manufacturer,
heavy equipment or machinery could be considered your assets or if you are a restaurant, your
oven fixtures could be included as an asset. These assets can depreciate overtime, so certainly
a healthy cashflow is more appealing to lenders than capital assets. What is capacity? Capacity
is referring to the company’s ability to pay back a loan based on the amount of revenue
that’s currently being generated. If you are a brand new business, you don’t have any revenue
generated. So your capacity to pay back a loan is not as easy to determine because you
have no prior history of doing business or no revenue currently being generated to rely
on. If you purchased a business that historically had a positive cashflow or income exceeded
your expenses, and that can be shown, lenders will look favorably for that type of business
capacity. The other C of the four Cs of credit is collateral.
In lending agreements, collateral is simply a borrower’s pledge of property to a lender,
to secure repayment of the loan. It’s serving as protection for lender against the borrower’s
default. Collateral ensures that the business owner is actually tied to the success of the
business, and if for any reason the business were to fail, the business owner is personally
invested in the success of the business. Next slide please.
The four Cs of credit that I outlined in our prior slide, can help to determine the overall
credit worthiness of a company, but there are many factors that could impact your company’s
credit, credibility and reputation. Business credit is amount of trustworthiness or expertise
that company has in the eyes of his clients and business partners, and customers. Credibility
is often a combination of a company’s credit profile and also its reputation. If it is
lacking one or the other, then the company may by viewed as having poor credibility.
On the other hand, if the company is doing great in both company’s credit profile and
have a great reputation, it could be reviewed as a credible company, and certainly one worth
doing business with. Next slide please. Why should you care about your business credit?
Let me get to get to the next slide. Economic growth require small business growth. Small
business is a big deal. Small business is a catalyst of job creation. Without access
to capital, they simply can’t grow. What most people don’t understand is that the bulk of
businesses in our country are small businesses. Next slide please.
Small businesses need capital to grow. Healthy cashflow is actually the lifeline of any business.
Purchasing and marketing, recruiting, distribution, and payroll, are just some of the many daily
functions that fail to thrive without a dependable means of funding. Hiring that one to two employees
is something that may be very important in terms of servicing that new customer you just
brought on or if your sales reps are really successful and they’ve brought on some new
clients, how do you get those clients the support that they need without hiring one
or two more people. Maybe you are the business owner who’s current
employees have been with you for quite a while. They are loyal, they are hardworking, and
you would love to give them a raise. How do you afford it? In order to be competitive
with other employers in your area, your company many have to increase benefits packages, 401K
plans, medical benefits. How do you afford all of this and still be profitable? Oftentimes
by growing your business. Maybe that’s through infusing capital into your business, but how
do you get that capital? Next slide please. Banks want to loan to small businesses, and
getting a small business bank loan is never easy. As a small business owner, there are
things that you can do to get ahead of the game in building your credit and demonstrating
that you are a reliable business. Some of those include having a robust business credit
profile that outlines the history of how you’ve historically paid your bills and the amount
of business you can afford. Make sure that your business credit profile is accurate and
up to date, so that there is a current report that shows the strength of your business.
Next slide please. Qualified small business owners are hard to
find, so simply be aware of what your business credit profile currently says about you. If
it’s positive, leverage those positive scores in your negotiations. If the information about
your business credit worthiness is limited, then work to build your business credit profile,
and start the process of keeping your personal credit personal, and your business credit,
business. Next slide please. Here we have an article by David Nelson, on
entrepreneur.com where they analyze the NSBA’s report, which estimated that roughly 8 million
small businesses are strapped for cash and unable to hire, or to take on new hire or
sadly, even keep their doors open. Unable to grow their business or expand their operation.
This happens often. Maybe you have to reduce the number of employees you have because you
simply can’t afford them. You many not have the number of customers coming through the
door that you had anticipated. Unable to finance increase sales. You got
that big order, but how do you finance it? Then you may have to inevitably, if you can’t
afford, you don’t have enough money or revenue coming through your doors, close stores are
branches due to lack of business or lack of funding. Next slide please.
Let’s talk about, does business credit matter? Next slide. We get the question all the time
from small businesses is, “I don’t need credit.” Let’s talk about the ways that business credit
makes a difference. Let’s say your company is located on a side street in your town.
You would really love to be on a main thoroughfare in your town or a new building, a larger building.
When you go to that landlord or you go to the property owner to discuss that new location
you want to move into, one of the things that they want to know is, “Let’s talk about how
you historically paid your rent or your mortgage. Let’s talk about the terms that we are going
to set, based on how credit worthy you are or if you are very little risk, and what impact
would that have to your business, if you were able to get that newer location or larger
location, or at a better side of town.” Another way that business credit matters,
do you have a product that you shipped? What percentage of your cost are tied up in freight?
If you have a great business credit report, are you able to negotiate longer terms? Are
you able to not have to pay COD? That make you more competitive because you can keep
that cash on hand longer. Another for instance on business credit, is payroll credit. Oftentimes,
payroll companies will float their accounts [inaudible 00:15:43] same amount of credit
to their current customers, in order to process payroll for them.
My personal experiences, I’ve had a customer that called, whose business credit scores
declined and the line of credit that is normally extended to them while they are waiting for
their accounts receivables to be paid, was actually denied. The payroll was due and they
are waiting for a $100,000 increase or a $100,000 float on this line of credit. The payroll
company denied it based on certain scores having dropped. The immediate impact was the
owners had to find a way to get to additional money to pay payroll the following day. That’s
how for instance how business credit matters, outside of just trying to get a loan.
Another thing could be national distribution. Let’s say you are doing business with a mass
merchant and they are going to test your product in a certain area of the country. Maybe they
are only going to test it in let’s say, the southeast US, but all of a sudden sales take
off, and they want to put you into other areas of the country. Guess what? You don’t have
the financing you need to buy the inventory or to ship the inventory, to all of these
areas of the country, in order to fulfill this order. That could impact your ability
to nationally distribute your product. [inaudible 00:17:03] jobs on bids, how many
of you submit bids to contractors? One thing that you can do is use positive business credit
to actually leverage to get more jobs, when submitting bids. You can leverage the fact
that your company pays their bills in advance of others in your industry. You can leverage
the fact that you got a long history of great credit. You can leverage the fact that you’ve
got great reputation online and credibility. That’s just one way or another way that business
credit matters. Next, which is more common that people understand,
like of credit increases. Let’s say you do get that big order, but you need inventory
to actually fulfill the order. What’s that going to require that may also require an
increase in your line of credit. If you were to go to your lender today to ask for the
line of credit, what does your business credit report look like, and could you support getting
that increased line of credit? Could you go to the next slide?
This is certainly not a comprehensive list of all the ways that business credit matters,
but it does have a significant impact on the terms, the conditions, the ability for a company
to leverage and negotiate having had a great history of business credit. If you have great
credit, you can go to a property manager or you can go to a landlord to say, “I’ve historically
been at these locations. I’ve paid by bills on time. We are a growing company. We have
revenue coming in, and we want this particular property.” You have th ability to negotiate
or it’s a freight company. They may not offer you terms, then you have the ability to go
to another competing freight company, and use your business credit history, and have
that type of ability to leverage business credit.
All of these are great ways to actually understand and focus on why you need to build your business
credit profile, but not only that, manage and monitor your business credit profile.
Next slide please. I’ll give you an example of what is business
credit, If you’ll go to the next slide. People often think that business credit is about
getting a loan or getting an increased line of credit. I’ll give you for example of a
business that I worked with personally, who was a wholesale florist, that sold through
mass merchant, who had great business credit. Most companies will monitor their vendors
business credit report to determine and manage their risks. They want to know that all the
people that provide to them, are reliable and that they will be able to ship the goods
on the terms and conditions that were actually negotiated originally.
In this for instance, wholesale florist sell through mass merchants. They have a business
credit profile that is strong. What happen was, all of a sudden one of the trade experiences
in their business credit profile, dropped out. That happened to be a quarter million
dollar experience. Once the quarter million dollar payment experience fell out of the
business credit profile, the only other credit experiences that were remaining, were much
smaller, to the extent of $5,000, $10,000, $1,000, much smaller, also still paid promptly.
However, some of their scores and ratings are driven, especially the Paydex score on
a person’s business credit profile, is driven off of the size of the trade experience itself.
When a quarter million dollar experience, which fall out of your file, and other experiences
remain that are significantly smaller, that may indicate within your scores that you have
become higher risk. It doesn’t show that you are able to pay the same amount of business
on time promptly. It doesn’t show the amount of business that you could support.
In this for instance, their supplier evaluation score, a score that shows the reliability
as a supplier, had declined, not because the company had not paid their bills on time,
but because a certain experience had fallen out of their files. They did get the call
from the mass merchant that says, “You want to make sure this has to be at a minimum number
for us to continue to partner with you because the current score in your business would indicate
that we have some risks in continuing to partner with you.
You have 10 days to have the score back where our minimum thresholds are met. Certainly
at that time the business owner was frantic to ensure that we have added back into their
file, D&B had added back into their file, hire lines of trade to support that nothing
had changed in their business other than a particular experience had fallen out. That
is an example of why you want to make sure you are monitoring your business credit profile
to make sure that it is accurate and reflective of the amount of business you could support,
as well as how you pay your bills. A trade experienced, so I can outline what
that is. A trade experience is a record of how you’ve paid your bills to a particular
vendor. For example, I have a vendor that requires that I pay my bill net 30 days, and
every month I pay $10,000, excuse me, I actually pay a bill for $10,000 to that vendor. I pay
it on the 30th day. I’ve met my terms and I’ve paid it, and that would be recorded that
I pay my bills promptly, and a $10,000 trade experience would fall on the file.
Overtime a trade experience can fall out of a business credit report. A trade experience
will stay on a business credit profile, 24 months. You have the responsibility as a business
owner to make sure that you are continually managing the content and monitoring it to
make sure the information is reflective and accurate of your current business today. This
is a for instance of someone who built business credit, was actually managing their business
credit, but wasn’t monitoring it. It goes back to emphasize, it’s not a one time profit.
You can’t look at you business credit report today and then forget about it. It’s an ongoing
process, that you as a small business owner want to stay involved in. Very similar to
your personal credit. You don’t just pay your bills on time one
month and you just don’t care about your FICO score only because you are getting a mortgage.
You should, throughout your adult life, care about what your FICO score says about you,
so that when you go get your car or maybe you are doing rental property, all those types
of things, it continually allows you to manage and monitor the process. Next slide please.
Next slide please. I want to talk about improve business credit.
What can it help you with? Certainly increased sales and loan opportunity, how much easier
is it for you to go to the bank to get an increase or get a loan? When you walk in there
and you’ve got a proven history of how you pay your bills, higher lines of credit are
available to you. I am sure if you are a small business owner with a great business credit
score, you are probably getting all of that mail that says, “Here, take this business
credit card. That this business credit card, take this business credit card at these very
low interest rates.” Improved finance rates and terms. We make
a joke that said, “Those customers or those companies that have great business credit
profiles, they are able to get that 2% eternity, net never, type of financing and terms, because
they’ve literally have taken the time to differentiate themselves from the competition. They’ve got
a proven track record and they pay their bills on time, they are very low risk, they are
certainly someone that I want to partner with. They have better cashflow and greater credibility
for increased deals and sales. You work hard to get people that actually
sell your company’s product. You knock on doors, you are trying to get that particular
job, you are trying to close that big deal, but what happens when your sales reps no longer
there are you are no longer there and that company looks you up online, to figure out
who you are and what you are about, and if you could support the amount of business that
they need; what does that say about you? You want to understand your business credit report.
Next slide please. Let’s talk about how business credit work,
and you could go to the next slide. We want to kind of help you outline how a business
credit file could even be created. This slide is one example of how a business credit file
is created via D&B. There are other additional sources of business credit files available
to the public, including Experian, Equifax. This for instance is a D&B profile and how
a business credit file is created. You register your business name somewhere.
When you register your business name, that indicated that there was a company at this
address, at this phone number, with this business name, that was beginning to start. That could
count as a piece of information that might indicate to D&B that there is a potential
business operating. If a second incident happen, maybe you tried to take out insurance, using
the business name, now we have two pieces of information, and at that point, a good
indicator that a business is forming. You may have done nothing with D&B directly
and a business credit file can be created. Maybe you tried to partner with someone or
you tried to do business with someone or you inquired about doing business with someone,
and they tried to investigate who you were and pull your business credit profile. That
customer inquiry could also be another source of information to determine that there as
a business operating at this phone number or address.
You could never get a call from D&B but still have a business credit profile. Certainly,
if you are shipping any goods and services under a company’s name, that could indicate
also to D&B, if that’s being shared at that point, that we’ve got a business that’s registered,
we’ve got people who are inquiring about this phone number business address, they are shipping
goods from here, pretty good indicator that there’s a business operating. There may not
be much information in the file on that business, but certainly a DUNS number could be assigned
to that business entity. Next slide please. We are going to show a quick video outlining
how D&B tracks your business activity. Speaker 3: By simply being operational, your
business may have been assigned a D&B DUNS number through D&B data gathering process.
If D&B comes across a business that isn’t in its database, it tries to assign that business
a DUNS number and start a credit file. It just needs confimation that the business exists.
D&B needs two or more sources showing that a business exists. D&B uses many sources to
try and confirm a company’s existence. A business could end up with a D&B number
by providing goods and services, setting up accounts with vendors, suppliers or banks,
advertising, filing legal documents and legal entities, or submitting financial statements.
Because D&B gathers this information from outside sources, a company may be unaware
that it has been assigned a DUNS number. For example, imagine that a company files incorporation
papers with the secretary of state, that filing could be one source, documenting the company’s
existence. If that company enters into an agreement with
a vendor that reports payment experiences to D&B, those reports could become the second
source. D&B could match those two pieces of data to confirm that the company exist and
create a DUNS number for it. Amber: There we showed you how D&B actually
tracks business activity. Why would someone inquire about your business credit report?
Because business is constant and ever changing. Here are some astounding numbers, in any give
hour, 385 suits, liens or judgments will be filed against companies, 11 businesses will
file for bankruptcy, 74 business phone numbers will be changed or be disconnected, and 87
new businesses will open their door. Think about that, if you have a subset of
customers, how many of your current customers may fall into one of these four categories,
and how would you be aware of it? The same is true if you are a customer of someone,
so at that point they want to ensure that you are not one of these 11 businesses in
this hour that may file for bankruptcy. If you were to, what type of debt would you still
owe them? It’s just smart as a small business owner, to be aware of how your customers pay
their bills, how reliable your suppliers are, and to be aware of what your business credit
report says about you. You can go to the next slide please. In that
same vein, you want to talk to you about the steps that you can take to help improve your
business credit. Next slide. First and foremost, number one, check your
business credit profile. How do I even do that? You want to start by downloading the
credit reporter mobile app. Creditreporter is the mobile credit report application for
Dun & Bradstreet Credibility Corp products. It includes credit signal, credit alert, credit
monitor, and credit builder. Business owners can register a free credit signal account
to view information about their business credit report, and receive alert to notifications
when there are changes to their credit report. Existing Dun & Bradstreet Credibility Corp
customers can log into their accounts, to view a mobile dashboard for their respective
products and credit report. As well, if you have questions, credit advisors can be contacted
easily [inaudible 00:32:08] call within the application. Again, this is the first and
only product on the market to provide companies with a free mobile credit report application
as well as free access to changes in their D&B credit scores and ratings.
I highly recommend that download the creditreporter mobile app, and then sign up for credit signal
for free. With credit signal, you actually get free alerts to changes to your D&B scores
including Paydex. You get a monthly email alert to changes in your report and you can
log in anytime to see all of your recent alerts in one place on your business credit profile.
Let’s say you log in and then you see a discrepancy in your business credit profile information.
At that point, you can go to companyupdate.com. Again, this is free of charge, and you can
make changes to your company’s information. What is companyupdate.com? It’s actually a
quick way for you to established your business credit file. You can get a free D&B DUNS number
from Dun & Bradstreet. You can review and update your existing D&B credit report. You
can review and dispute payment experiences reported to D&B. You can update financial
statement information. You can review it to see public filing information, and you can
view and print a copy of your D&B credit report. I just outlined three ways that you can actually
check your business credit file, and that is the very first step, and it is the most
important step of all the things that we’ll talk about. Next slide please.
We talked about keeping personal credit, personal, and business credit, business. You want to
make sure that you establish and build a business credit history for yourself. Oftentimes we
talk to small business owners, who are buying everything on their personal credit card,
who are putting invoices in with vendors, under their personal name. When we go to start
the process, to build a business credit profile, they have nothing to establish, that they’ve
actually being paying bills as a business for quite a while.
The very first thing that you can do, is when you are filling out applications, when you
are buying products, buy it under your business name. Even for a while if you have personally
guarantee it as a business owner. You want to add good payment history. You want to make
sure that you are paying your bills on time, and you want to make sure that you are paying
your bills on time under your business name. Establishing build a business credit history.
Next slide please. We are actually going to show you a quick video about separating business
and personal credit. Speaker 3: Your D&B business credit profile
may play a big part in the decision process for banks, credit card companies, insurance
companies, and other potential partners. It’s important to understand that only business
credit shows on a D&B report. Personal credit doesn’t. If you are using personal credit
for your business, people who look at your D&B credit file to make credit decisions,
may not see the full picture. You can start building a strong business credit
profile at anytime. The first step is making sure the information on your profile is accurate,
and empty incomplete or inaccurate file may result in higher premiums, higher interest
rates, lost business or challenges in raising capital. Add company details, like the number
of employees and financials, to your D&B business credit profile. Complete information and positive
scores can make your company appears stronger and more stable.
Adding positive payment experiences, helps show lenders and creditors that you company
can deliver on its payment terms, rather than paying cash on delivery. Your D&B DUNS number
can also help build your business credit profile, even if you are also required to provide your
personal credit information. Whenever your company applies for lines of
credit, terms with partners, and so on, provide your DUNS number on the application. Use it
to negotiate better terms or negotiate with your longterm suppliers to remove the personal
credit information from the account after six months are so, once your company has proven
its trustworthiness. That way if you partners report your payment history to D&B, your company
is rewarded for the payments it’s making. Amber: Overall, they were simply stating that
you want to make sure that you don’t have an incomplete business credit report because
lack of information can negatively impact you. It can cause you to get higher interest
rates, it can cause you to get shorter terms, it can cause you to have higher premiums,
because people have a tendency, banks have a tendency to err on the side of being conservative.
If you have very little information, there’s not enough information to make an educated
decision on the terms and conditions in which to do business with you.
Number three, the steps to building your business credit, pay your bills on time. We talked
about that. Not all bills are equal. Higher bills or bills that are larger, for example,
you have a vendor that is a $10,000 payment that you pay monthly. Then you have a $100,000
or let’s say you have $500,000 that you are paying monthly. That will have a much more
significant impact on your scores and ratings on your business credit profile, than a $100
payment experience, paid promptly. You want good credit history to be reflected
on your file, and you do need to understand that you can have all the $25 trade experiences
you want or all the $100 trade experiences that you want, paid promptly. If there is
a negative experience of $5,000, then it will have a much more significant impact on your
overall scores and ratings, because we go back to historical payment information, can
allow a predictive score to predict the way that you will pay your bills overtime, or
the amount of financial distress that you may experience over the next 12 months.
A lot of that is going to be contingent on the current business that you show you support
and the amount of that business, and whether or not you pay that bill promptly. You can
go to the next slide please. We talked about monitoring your business credit
profile. Keep an eye on this. We went through the ways to do that. Keep an eye on your company’s
D&B scores and ratings. Did you know that you could be notified when you have an inquiry
on your business credit report? Did you know that you can actually be notified and we can
inform you of the industry that is looking at your business credit report, and then you
can identify how extensively your company’s information is being used, but more importantly,
you can know what areas of your business credit profile needs to be improved?
You are going to be alerted. If you are monitoring your business credit profile, you’ll be alerted
to scores and changes in those scores that may overall impact how your company is being
viewed. The next slide please. Just as important as you are monitoring your
own business credit profile, the same is true when other people are monitoring your business
credit profile. You need to monitor the credit profiles of your customers and also your vendors.
Sometimes people ask me, “Why would I want to monitor the credit report of my vendors?”
Because what would be the impact if your largest vendor experience financial distress? You
want to make sure that you are reliable and you can continue to deliver to your customers.
What would be the impact of one of your current customers not paying you on time? Which being
you could not pay your current vendors on time. If your current vendor drops you, do
you have the flexibility and the credit history to go to another vendor that have the same
type of product, and negotiate a shipment of goods? When you have good business credit
profile, you have the ability and flexibility to leverage that information, the operate
more profitably, and to negotiate. Next slide please.
These are the five steps. Build your business credit profile. Check it first to make sure
you have one. Someone ask the question, where would I find if I have a DUNS number? You
can actually go and log on, putting in the business information, and if there is a DUNS
number associated, it will give you the choices or the companies to choose from by name, that
can select a particular DUNS number. You may not have a DUNS number, and if you don’t have
a DUNS number, then you would go to companyupdate.com, like I mentioned, and you can go through that
process to have one created. Number two, establish and build and business
credit history. We talked about ways to do that. Adding information into your file. You
want to make sure that you have an accurate reflection of the number of employees. You
want to have an accurate reflection in your sales volumes. If you choose, you want to
include financial information of your business, because the more information that you can
include, the more information there is to make an educated decision. If it’s favorable
information, oftentimes you can leverage that to separate yourself from the competition.
Most importantly, pay your bills on time. Monitor your business credit profile. I cannot
emphasize that enough. I used the example of the customer that I spoke with directly
about the wholesale florist to a mass merchant. Unfortunately, 80% of his business was tied
up with this mass merchant. Had he lost that account, he mentioned to me, 80 people would
have been laid off, because it was that significant part of his business. More importantly, not
sure that he could find an other customer of that size.
Monitoring your business credit profile became very important to him, but don’t wait, don’t
be reactive, be proactive in that process. As importantly, monitor the credit profiles
of your customers and your vendors. One way to keep business risk at a minimum, is just
to be aware. If you took your current vendors and ran them through a profile that says,
how risky are they, what percent of risk are you taking, doing your business with these
current vendors, and should you go diversify your supplier base, so that you don’t have
that risk. Have you ever looked at your top customers
that you have today? Are any of them beginning to pay slow? Have you looked at their business
credit profiles? Making sure that you as a business owner are just as proactive about
your current customers credit profiles and your vendors credit profiles, is very important.
Next slide please. At Dun & Bradstreet Credibility Corp, we are
certainly here to help. We consider ourselves small business advocates. As we consult with
small business owners all day, every day, we talk to them on a variety of issues, including
building business credit. We want to make sure that you watch our educational videos.
They will answer most common business credit questions that we get. That is at education.dnb.com.
That concludes the five steps to building business credit. At this point, I will actually
open up the webinar to questions. I’ve been seeing a lot of them come across, so we’ll
just wait for those. Justin: Hi. This is Justin Luther, Amber.
Thank you so much for the wonderful presentation. I’ve been tracking a lot of the questions
as they come through here. We have similar questions that I think are a great place to
start, from a Linda and Letia [Bodd 00:44:33]. They just asked, “How do we check our business
credit?” Amber: You would check your business credit
by going on to dnb.com, and you can search for your company information. At that point,
if you are filing your business credit profile, clicking into that and actually looking at
your business credit report, is that process to take. If you go to dnb.com, you can actually
get to that business information to see if you even have a business credit report.
I’ll go back to the steps that I asked you to make sure that you do. If you do the creditreporter
app, it’s very, very simple in that process. To type in your company information, and at
that point, if you have a DUNS number or if you have a business credit profile, you can
just register for credit signal there and get free alerts to changes in that information.
Justin: Thank you very much, and I thought I would throw out … I see some more questions
coming through people. We have about 10 more minutes to answer questions, so if you do
have them, please add them to the chat there. The next question I would handle comes from,
let me scroll back up again, from Anna [Skinkin 00:45:48]. She said, “How does this work for
small business owners who are in the bakery and pastry field? For example, they do not
produce high sales or employ very few people.” Amber: The good news about business credit,
is that there’s no discretion. It literally applies to all of us. The baker is no different
than a 100,000 employees manufacturing company. Your business credit is relative and important.
Let’s say you are buying goods that you need in order to make those pastries or those rolls
or that bread, your vendors that supply you those goods, want to know that once they’ve
shipped those to you, that you’ll pay them back on the terms and conditions that are
set. Let’s say you’ve historically never paid your
bills on time and them you go to this wholesaler of flour or what have you, and you say, “I
would like to buy $100,000 or $10,000 worth of products from you, and I would like to
pay for it in 90 days,” if they pull your business credit profile and you’ve never shown
that you’ve purchased anything more than $500, and of that, you’ve paid it slow, the likelihood
of you getting terms on the goods that you are buying, would minimum.
Let’s say that you are a surviving baker and you want to expand your operation to the other
side of town or maybe out of state. You have not established business credit history, how
do you go to your bank or a lender and try to negotiate getting additional capital to
infuse in your business, because you’ve gotten no credit history to talk the talk and walk
the walk? That’s why it’s so important, no matter what your size is. If you are one employee,
I would say it’s as important as having a 100 employees, because how do you get 200
employees without having great credit? Justin: Makes sense to me for sure. Thanks
so much. Another one. This will be a pretty easy one. Gary [Otomas 00:47:44]. “How do
I figure out my DUNS number?” Amber: How do you figure out your DUNS number?
It really goes back to the same thing that I was referencing. If you go into the creditreporter
app and simply type in your company name state, it will pop up with some selections. If there
are several companies with your name, choose which one you are, and it will provide you
the DUNS number for that organization. Again, I go back to also type in www.dnb.com, and
you can search for your business information. Justin: Very cool. I had a question that also
come through, I thought was interesting, pretty early on from Sheronda Wesley. She asked,
“Will we be able to download a copy of the slides?” This might go to the SPA team as
well. I know that we said we would make these slides available, but I’m not exactly sure
where somebody will go to find that. Natalie: Hi everyone. This is Natalie Gorial.
What’s going to happen is, after the webinar, we will email all participants a copy of the
presentation, along with a recording of today’s webinar. Just a reminder, that recording of
today’s webinar will be available at YouTube.comsba. Amber: Justin, I want to emphasize, about
the question on how do I get to my company’s DUNS number, I went to dnb.com and my selection
at that point is, get a D&B credit report. I can check my business or another business.
You’ll select that and then you can search by business name or phone number of DUN. If
you already know your DUN, you could put your DUN in. If not, just put your business name
or your phone number and you can search there to see if you have one.
Let’s say you did not download the creditreporter app, you could go the same way dnb.com and
there are some tabs at the top and you click business credit reports, and you simply click
the tab that says, “Credit signal.” That is the free offering that I was telling you to
attract alerts to your business credit report. You simply click “Get it now for free.” When
you do that it ask for your business address and then you can sign in that way, but first
you are going to search for your business name or phone number or DUN.
Justin: Very cool. I had another question relatively early on from John [Hicken 00:50:11].
He asked, he’s in the beginning stage of starting a business, how do you separate his personal
from his business credit? I know you answered some of that , but I also know that some of
that was in the video that some people were having trouble with. Could you just give some
highlights there of just if somebody is starting a business, what should they be looking at?
Amber: This is a really good question. It’s a common question that we get all the time.
As a small business owner, oftentimes we see sole proprietors using their personal credit
cards, using their own cash on hand that they have in their bank account to pay bills, and
they do not often ask whether it’s an office supply company or an office furniture company,
they don’t ask for a business account to be set up.
My suggestion is, when you are purchasing goods, when you are doing anything, you should
ask for, whether it’s a business credit card and you can personally guarantee with your
personal information, making sure that you’ve established business accounts, is the number
one way that you can start to differentiate the two, and then at the same time, you would
reach out to Dun & Bradstreet Credibility Corp, and you would try to initiate a free
DUNS number through D&B. All of the experiences that you are recording
or purchasing through your vendors as your business name, most of them are probably ones
that could be reached out to record that transaction. Let’s say I’m ABC Florist company, and I just
started my business. I’ve always bought using my own personal credit. It would be to my
advantage to go to the vendors of this flowers to tell them, “Moving forward, I want you
to use my company name and my DUNS number, and if there is no history there on trying
to establish it, I’ll personally guarantee it, if that’s required, but overtime I want
to differentiate the two from each other.” It does take time sometimes, but it’s certainly
worth starting the process now so overtime you can no longer have to rely on those personal
guarantee as a personal credit. Justin: Very cool. I had another question
that come through here from Rex [Cursey 00:52:33]. I hope I’m saying his name right. He says,
“Are there FPA or similar promotions subscribed to reporting services?” He had a couple questions.
That was one. Do you have an answer for that Amber?
Amber: If you are talking about particular promotions or offerings that we have, we are
oftentimes sending those out to small business, either through direct mail or online. I highly
recommend that if you are looking for certain offerings that we have, go in back to dnb.com
and play around on that website, because there’s tons of educational information, there’s tons
of product offerings, there’s free samples. You can get alert, you can get the free credit
signal. At that point they are probably are at that point, special promotions or offerings
out there. Justin: He has another question I thought
was interesting as well. He says, “For cash purchases from suppliers, how do we self report?”
Amber: Cash purchases do not weigh on a payment score. If you can negotiate that, I would
suggest that you don’t pay cash. Even if you said to them, “I would like to have an invoice
that stated we pay on net 30 day terms, and I’ll turn around and pay it today.” Because
the cash experience cannot be weighted in a historical view of how you pay your terms.
It can be recorded in your business credit profile, but it has no bearing or weight on
your actual Paydex score, which has a heavy weight on all of your other stress scores.
Justin: I’m sorry if I’m scrolling here. There are so many questions actually coming through
that I am trying to get up to the right one as I go through these. I thought there was
another one from Jeffery Henderson. He said, “How do we verify ownership of a business?
What [inaudible 00:54:41] unauthorized fraudulent info being added?”
Amber: You would have to verify it through the … Your business license has to be included.
There are a whole series of questions that you are asked in terms of building and determining
that you are the actual owner of the business, what percentage of the business you may own,
if there are other people included that are part owners in the business. We take that
very seriously in terms of making sure that information is reported to us, will actually
filter back and be accurate and up-to-date. There’s a series of steps that you go through
to validate the authenticity of who you are and who owns that business, what address is
it at, what email address is tied to it or web address, and all of those things.
We do have services that will verify your information that you’ve updated and you’ve
provided, across 125 different online platforms. If you are interested in making sure that
your information is complete and up-to-date across the web, it is certainly something
to look into. If you went back to dnb.com, one of the credibility solutions that we offer,
is a product called “Verified.” You can [inaudible 00:55:58] and that’s actually sent out to
125 different publishers across the web. Especially as a small business or a new business, it’s
something that I highly recommend. Justin: There was a follow-up question, one
of the previous ones, from somebody by the name of [Ericka Kirksky 00:56:15]. She asked,
“Is self reported even an option?” Amber: Self reporting is an option. That is
part of what we provide with our credit builders solution. We allow a small business owner
to provide however many trade experiences that they have, that they would like D&B to
reach out to, to report the trade experience into the business credit profile. That can
absolutely be done. Our credit builders solution, offered by Dun
& Bradstreet Credibility Corp, address that particular need, because there are so many
small businesses out there that do business with certain companies, that may not automatically
report. This creditability solution allows you to do that.
Justin: Thank you so much. It’s barely after 3pm Eastern time. I believe we are supposed
to be wrapping this up right now. There is still so many questions. I think we should
let everyone know that we will be following up with people via email, I believe that will
be an option, to answer any unanswered questions here, because we want to make sure that everybody
gets answers to their questions. Can I turn this back over to Natalie?
Natalie: Yes. Thank you again everyone for joining our webinar. Again, the recording
of the webinar will be available later this week at YouTube.comspa. Thank you again for
joining and thank you so so much Amber. Amber: You’re welcome. Thank you.
Natalie: Thank you. 042214-204992-5-Steps-to-Building-Business-final
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