Poor quality business data is an expensive problem that companies cannot afford to ignore. According to research from IBM, bad data costs organizations an average of $3.1 trillion per year in wasted resources and lost opportunities. The damage doesn’t stop there. Incomplete and inaccurate information can lead to operational disruptions, poor strategic decisions that stunt growth, regulatory fines, and reputational damage.
Data integrity is also critical for accurate business verification. This process, which is integral in many industries, involves validating the identity and legitimacy of business customers and partners. It allows organizations to maintain regulatory compliance and reduce risks associated with financial crimes.
Unfortunately, approximately 20-40% of small business applicants are rejected due to an inability to verify business information. Often, this is a result of insufficient verification processes, rather than a legitimate problem with the business. Improving verification rates by just 10% can increase a company’s bottom line by millions of dollars.
The real cost of bad data
The massive financial cost associated with bad B2B data certainly grabs attention, but it doesn’t tell the whole story. There are less obvious but equally serious risks that companies must consider.
Reputational damage
When data inaccuracies become public, they can significantly damage a company’s reputation. This threat of negative publicity and the erosion of trust may impact how customers, investors, and partners perceive the brand. Reputational damage can cause long-term losses and may even end in business failure.
Operational disruptions
Inaccurate or incomplete data can cause significant disruptions in day-to-day operations, leading to inefficiencies, delays, and the misallocation of resources. These disruptions hamper productivity and can strain customer relations.
Legal and regulatory risks
Failing to manage data correctly can result in noncompliance with laws and regulations, leading to penalties, fines, and legal action. This is especially critical in industries where data accuracy is tightly linked to AML compliance.
Strategic risks
Poor B2B data quality can result in misguided strategies or failed executions. This often creates barriers to market entry and expansion, preventing businesses from capitalizing on new opportunities.
Common causes of inaccurate or incomplete data
While many organizations have procedures in place to verify business information, inaccurate or incomplete data continues to be a significant problem. Even companies that reference multiple data sources and use B2B data providers or third-party business verification services commonly hit roadblocks during the verification process. There are several reasons why.
Data inconsistencies
Discrepancies across various data sources, including official registrations and online directories, can lead to data mismatches and failed verifications. Minor errors, such as typos or misspellings, can also make it difficult to accurately verify a business.
Verification provider limitations
Not every data verification company has the technology and extensive databases needed to provide sufficiently high verification rates. Choosing a business verification provider that uses outdated technology or is not equipped to handle complex data matches puts your business at a disadvantage.
Complexities caused by global operations
Verifying businesses that operate on a global scale requires dealing with various jurisdictions, which may have different rules for registration, operation, and compliance. The process becomes even more complex when organizations operate in jurisdictions that are known for a lack of transparency.
The rise of digital businesses
The rise of online-only businesses complicates verification processes. Since these businesses have no physical presence, advanced strategies and tools are often needed to ensure accurate identification and adherence to compliance requirements. Working with verification providers that are not prepared to handle digital businesses can create unnecessary risks.
Top business verification pitfalls and how to avoid them
Despite having verification procedures in place, many businesses face roadblocks that lead to costly failures. Fortunately, the majority of these pitfalls can be avoided with the right B2B data enrichment tools.
Lack of standardization
Without a standardized business verification process, companies are subject to inconsistent and unreliable outcomes. This is a common problem when organizations rely on internal reviews rather than a tech-based solution. Using a professional data verification company creates a consistent framework, providing uniform results.
Insufficient resources
Firms often struggle with verification due to limited internal resources, such as a lack of comprehensive data or the manpower to analyze it deeply. This can lead to overlooked details and missed red flags. Working with an industry-leading business data provider like Markaaz ensures access to a robust database and matching algorithms that minimize the need for human intervention.
Overreliance on public information
Public databases may be out of date or lack comprehensive information, creating data gaps. Advanced verification solutions draw from a broader range of data sources, including extensive premium databases. This ensures a more thorough and accurate verification process.
Inadequate technology
Outdated or inadequate technology limits the efficiency and accuracy of verification efforts. Modern verification processes use sophisticated matching algorithms and data analytics tools to intelligently filter, match, and verify information. These technologies can recognize and correct data discrepancies, reduce false positives and negatives, and produce a more reliable verification outcome.
Relying on a single data provider
Many organizations rely on a single business verification service, while others follow third-party verification with a manual review. While this may seem like a thorough process, data gaps typically leave a significant number of businesses unverified at the end of the process.
Adding Markaaz to your Know Your Business (KYB) waterfall covers gaps left by other providers. The ability to accurately identify small, medium, and large businesses allows Markaaz to verify companies that other providers can’t, resulting in a notable increase in lifetime revenues.
Neglecting international verification
Global operations introduce complexity into the verification process. Diverse laws and varying standards for data privacy and protection increase the risk of oversights or unintentional noncompliance. Using technology that consolidates global data sources into a single, accessible platform simplifies international verification, making the process more accurate and efficient.
Ignoring beneficial ownership
Failing to accurately identify and verify the beneficial owners of a business can expose companies to regulatory penalties, fraud, and reputational damage. Advanced verification technology provides detailed insights into a company’s structure. Having access to robust information regarding key officers, beneficial owners, and the overall corporate hierarchy allows for more thorough due diligence.
Underestimating non-financial risks
It’s critical not to underestimate the damage bad data and verification failures can cause. Non-financial risks including reputational damage, political exposure, and environmental, social, and governance (ESG) factors can lead to long-term repercussions.
Advanced B2B data solutions enable continuous monitoring and real-time updates. Having the most recent, accurate compliance data, including sanctions screening and AML checks, helps businesses remain informed, so they can respond swiftly to potential threats.
Improve your verification process to boost company revenues
With a global database of more than 480 million businesses and industry-leading matching algorithms, Markaaz makes it easy to verify businesses that other providers can’t. Our advanced solutions lead to higher approval rates, increasing company revenues and providing a significant return on investment.
Connect with our team to see how working with Markaaz can improve your bottom line.
Free ebook
