As an enterprise, you likely already know the importance of data
Firmographic data and demographic data are both priorities for the average successful business. However, there is another kind of data that you should be aware of – business health data.
When you work with a new small business customer, one of the things you likely look at is their business credit score. This is one form of business health data, but it doesn’t entirely define this sort of information. It’s all about being able to monitor how a business is doing in real time through various types of data.
This article will go into what business health data is, the different types of information it consists of, and why you should be tracking these things. We’ll also share how you can easily access this data so you can use it in whatever way matters for your enterprise business.
What is business health data?
There are a variety of types of information that make up business health data. As mentioned earlier, one of them is a business credit score. As an enterprise operation working with small businesses, it’s important to be able to easily see the credit score of potential clients.
However, this isn’t the be-all and end-all of business health data. A business credit score is only one piece of the pie, showing you how well a small business is doing. Other information, such as a risk score and risk class, are also essential to be aware of. You can browse this information for a more nuanced look at the health of any company.
Each of these scores is essential for B2B enterprise companies. You have to know whom you are working with so you can make knowledgeable decisions as you move forward. The scores give you an idea of whether a business can repay its debt, loans, or credit.
While all sorts of businesses can make use of business health data, it’s especially imperative for financial companies. After all, part of the process is deciding on rates for lines of credit, loans, and other financial products. The right health data on a company can help you make intelligent decisions when moving forward with new clients.
Business credit scores
A business credit score is pretty much what it sounds like. It’s a credit score, but it is connected to a company rather than an individual. In most cases, a business credit score is determined by using the small business’s financial information and some of its firmographic data. This could include everything from amounts owed to past payment history, account information, historical business data, and how many employees are working at a certain company.
One of the things you’ll notice with a business credit score is that they don’t have the same range as an individual credit score. Instead, most credit scores for businesses range from zero to 100, while those using the FICO Small Business Scoring Service will range from zero to 300.
Several things distinguish a business credit score from a personal credit score. As mentioned, these scores are more compressed than individual scores, which may range from 300 to 850. In addition, anyone is capable of checking a business score. This is not the case for a personal score, which can only be assessed in specific situations.
Beyond that, a business credit score uses different factors to be calculated. These include company size, industry risk, debt, and debt usage, age of credit history, and payment history. With an individual credit score, the factors include average length of credit history, credit mix, new credit, amount of debt, and payment history.
Business risk scores
Another facet of business health data is a company’s business risk score. These are designed to give you the information you need to make excellent decisions about credit across the small business customer lifecycle. Different brands will have different risk scores based on business failure and business credit.
One of the most prominent providers of business risk scores is Equifax. The scores are built on pre-recession, recession, and post-recession data. Consumer data, scoring criteria, scorecards based on business size, and tons of attributes play into the business risk score a specific company gets.
Business risk scores are useful for answering some of the most common questions an enterprise may have when it comes to risk management associated with small business customers. For instance, it can help you answer the following questions:
- How likely is it that I will be paid?
- When can I expect to be paid?
- Is the client having financial problems?
- What amount of credit should I provide?
Depending on the company you use to access business risk scores, you can get a quick and simple glance at risk indicators or dig deeper into more detailed scoring factors.
Business risk classes
Finally, as the last piece of the financial puzzle, companies, including small businesses, are sorted into a business risk class. These classes are provided by FICO, Equifax, Experian, and Dun and Bradstreet. Using Equifax as an example, information from the Small Business Financial Exchange and public records is used to look at a company’s payments to vendors, banks, credit card providers, and more.
One of the main things to look at when it comes to business risk classes is the payment index. This gives you a quick way to see how likely it is for a small business to make its payments on time. It ranges from zero to 100, with higher numbers associated with companies that are more likely to make payments on time.
In addition, failure and delinquency scores are used. This gives you an idea of whether a small business will go bankrupt or stop paying bills within the next year. The scores vary, but typically a higher one is better as that means it’s less like a small business will fail or get behind.
Business risk classes may be used with or in replacement of business credit scores. They range from one to five and have a less detailed view of the risks associated with a certain business. In this case, a lower score is better for an enterprise that is vetting customers.
Each provider of business risk classes may have nuances, so make sure you check out the details. A five-point scale is typically used, but this may not always be true. Learn about the provider and how they set up this information to get the best results as your business grows and changes.
Business health data is essential for enterprises. It delves into business credit scores, business risk scores, and business risk classes. Some of all of this information can be used to quickly gain information about a small business before offering them credit or being certain they will continue paying for services.
Markaaz.com offers business health data, so there’s no need for you to seek it out on your own. For enterprise customers using its enterprise onboarding and monitoring services, Markaaz offers a business credit score, business risk score, and business risk class from Equifax. This helps its enterprise customers make the best decisions about their small business prospects and existing customers.
Data is essential for enterprises like yours. Make sure you have all the data you need on your small business prospects, including business health data, firmographic data, and compliance data, to inform your onboarding and monitoring processes. This will ensure you make the best possible decisions and can move forward with confidence.