Why is it important for an enterprise to know the business health data of the businesses they are onboarding?
Whether you’ve heard of business health data in the past or it’s a new topic for you, you might be wondering why it matters so much. That’s a fair question and one that will be answered in this article. We’re going to look at what business health data is and why your enterprise should be aware of it for companies you are onboarding into your platform for products and services.
Anytime you onboard a new company, you’re bringing them into your system and expecting them to purchase and pay for certain items. Whether you provide traditional loans or offer a product that is paid for on a regular basis, you want to be sure the customers are going to pay and become long-term customers. It is a beneficial decision from a financial standpoint.
Business credit scores, business risk scores, and business risk classes are all useful for this process in different ways. Each of them ties into financing and gives you an idea of what to expect for each individual customer. Below, we’ll share some insight into why your enterprise should be aware of business health data.
Reasons to pay attention to business health data
For enterprises that aren’t familiar with business health data, it’s a selection of data that gives you a larger view of the financial situation of a customer. By combining information about a business’s credit score and risk score, you can more easily move forward with customer relationships knowing that the small businesses you work with are trustworthy and reliable.
There are several reasons your enterprise should pay attention to business health data as an enterprise working with other companies.
It can help your enterprise:
- Decide whether to provide or deny credit.
- Give insight into the details of a business.
- Provide you with up-to-date credit scores.
- Help you choose loan terms.
When you use Markaaz’s Enterprise Services for business verification, decisioning and monitoring, these services access Markaaz’s Directory, which features firmographic, business health and compliance/AML data. This means you have all of the information you need right at your fingertips.
Know when to accept and deny new clients
Based on the NSBA Small Business Access to Capital Study, about 20% of small business loans are denied based on business credit scores. When your teams have business health data in front of them, they have the means to decide whether to onboard a new business or provide your products and services to them.
Without business credit and risk scores, your teams could make a mistake that turns out to be costly for your company. Having these types of data on demand creates a situation where it’s easy to move forward with acceptance or denial so you can move on to the next potential customer.
Be aware of who has an acceptable credit score
The Small Business by Demand Media survey indicates that many enterprise companies consider a business credit score of 75 only “acceptable.” Numbers higher than this score indicate a company with even less risk, while lower scores mean that the risk may be substantial in terms of being paid promptly.
Without business health data, your teams might not realize that a company has a score that is lower than what you’d like to work with. Not having this data puts your teams in a situation where they have to make decisions using other information, which may not be as useful as business health data that gives an idea of the company’s financial history.
Quickly decide on loan terms
When your teams look at business health data, they can easily determine what loan terms to provide to a specific company. One that has an impeccable credit score might be deserving of lower interest rates and higher credit limits than one that has only good or acceptable credit. This is something your teams can not know without relevant data.
There’s a good reason that those with the best credit get the superior terms. These are companies that are trusted to move forward and pay their bills. If you take on more risk, that needs to be tempered with less favorable terms in case something doesn’t move forward as expected.
Have a better understanding of your customers
Business health data isn’t just a credit score for a company. It does include that, but it also incorporates information about the company risk score and can include information about its risk class. Having this assortment of data gives your teams a better understanding of the company they are onboarding and dedicating your enterprise to having a relationship with.
All of these pieces of financial data are useful on their own. Having all of them provides your teams with several types of data that can be considered together. Not only is it useful for denying or offering credit to them, but it can also give your business insight into the products and services that might work best for specific brands compared to others.
Markaaz offers all of these important sets of data through its Enterprise Services, so your teams can make educated and confident decisions when onboarding new customers and clients. Below is more detail about the advantages of having this kind of information and what you can expect when you add it to your decision-making process.
How agencies provide business health data
Several agencies provide business credit scores, many of which also offer other business health data, such as a credit risk score or a business failure score. Equifax is one of the largest.
Using Equifax as an example, the first thing you see in terms of business health data is a payment index. This score ranges from zero to 100, with higher numbers speaking to better finances for a business. Scores from 90 and up are considered the best possible and will make the best clients to onboard.
In addition, a credit risk score is provided, which can range from 101 to 992. This looks into delinquent payments, account age, company size, and credit utilization of a business. This gives your teams insight into how likely the company is to pay you back on time and in full.
The final part of their business health data is the business failure score. It has a range from 1,000 to 1,880 and is better the higher the number goes, similar to the other scores we’ve discussed. Many factors, such as payment status, account length, and credit utilization, are used to determine where this score lands.
Final thoughts
At Markaaz, we understand that onboarding correctly and quickly is essential for an enterprise. We’re also dedicated to providing you with the accurate and up-to-date data you need to ensure you bring on the right companies for your products and services.
All the reasons we’ve talked about above are only a short list of what this data can offer you. When you have firmographic data combined with business health data and compliance/AML data, your business can onboard more businesses more accurately.
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