Are you attending NACM’s Credit Congress at the Gaylord Texan June 10-13?  If so, we hope you will come by and see us in Booth #101.  Look for the large Experian sign—you can’t miss it. 

We have lots of exciting things going on.  Our product experts are hosting live demonstrations of BusinessIQ and providing real-world examples of how the solution can be customized to meet your specific needs.  While you’re at the booth, be sure to enter our raffle for a chance to win a summer barbecue package—and on Monday and Tuesday, be sure to enjoy the special treat we’ll be serving!

Our folks are excited and ready to speak with you about working smarter, not harder to manage your entire business credit portfolio.   

For more details about NACM and exhibit hall hours, visit — http://creditcongress.nacm.org/home-cc12.html

In the world of Corporate Linkage I often hear, “linkage is never finished”.  What do I mean by this statement?  Change is constant in today’s business environment.  Some businesses are starting up while others are closing their doors.  Businesses are acquired and businesses merge.  That is why at Experian we constantly monitor for changes in Corporate Hierarchies that may impact your business. 

Do you do business with Microsoft or Skype?  If you do, you may be interested to know Microsoft announced on October 13^th their acquisition of Skype was complete.  At Experian we started monitoring for this event back in May when Microsoft announced their intention to acquire Skype.  We didn’t make changes to our database upon an announcement.  We waited until the regulators and shareholders approved the acquisition and for the legal ownership change to occur.  This change in ownership is our trigger to update the database and make this information available to you – real time!

The ability to actively monitor for business changes and make real-time database updates is just one of the unique advantages of Experian’s Corporate Linkage offering.  How do we do this?  Well there’s definitely a bit of magic that comes from our technology, but there’s a human touch as well.  Sitting just a few desks over from where I sit is our team of talented Linkage Analysts; the human touch to Experian’s linkage offering. If you have not checked out Experian’s Corporate Linkage recently, you can learn more here.

Fall is in the air, and ‘tis the season for tricks, treats and things that go bump in the night.

Businesses provide a great disguise for fraudsters because it’s relatively easy to create shell businesses or to take over the identity of a dormant corporation. Consumer authentication tools (which have historically been more sophisticated than their commercial counterparts) are sometimes used to screen proprietors to ferret out small business fraud. While these tools may verify the applicant is using a valid consumer identity, they are unable to identify risk factors associated with the proprietor’s current and past businesses.

Fortunately, new tools are now available that screen proprietors for potential fraud while providing insights into risks associated with their current and previous businesses.  These tools not only verify that the proprietor is related to the business and identify application irregularities, but are also helpful in identifying principals who have been associated with multiple businesses or poor financial performance, which may indicate hidden risks are lurking in your portfolio. Without these insights, the skeletons hiding in your guarantor’s past and present business relationships may hold some scary surprises for you.

The foundation of your commercial business begins at the customer level. With that, you’ll need a clear picture of your account’s health to make the best credit decision. Having data such as the following at your fingertips could prove to be very beneficial…

•  Additional business affiliations – Is your customer affiliated to any other customer you have within your portfolio? What is your level of exposure with all associated businesses?
• Small business owner business affiliations and asset information – For small business owners who are late paying or have defaulted, do they have any assets that can help you recoup on your funds?
• Credit score/changes – Has there been a shift in your customer’s score positively or negatively?
• Credit limit extended – If the score has changed negatively, do you need to reassess the account’s credit limit?
• Legal filing/trade alerts – Has there been any recent legal actions filed on your customer? If so, what is the impact to your account?
• Collection activities – Before you review the account for a credit increase, are you able to see if there are any collections activities that have historically taken place on the account?

Knowing if customers can pay you, when they will pay you and how much they will pay you are crucial components to protecting your bottom line. And having a global view of an account can help you do just that. Look for future posts from me, and let me know if there are any specific topics about managing your portfolio that you’d like to see.

In my last post I shared some insight on Experian’s Days Beyond Terms (DBT). Today, I’ll answer a question I received following that post – Why is there more than one DBT on a business credit report? The answer is different trade payment types may result in a different DBT. Let me explain what I mean to help pull it all together.

As you may recall, DBT is calculated from trade payment information received from suppliers. We then classify this information into three different categories – new, continuous and additional. 

• Continuous – trade payment information with at least one (1) update in the three (3) months
• New – trade payment information added within the last three (3) months with no previous updates
• Additional – trade payment information not updated within the last 3 months or non-trade accounts (ex: leasing and loans)

New and continuous tradelines provide a timely perspective on how a business is handling its current payment obligations. In addition, the distinction in tradeline type provides visibility into whether an applicant may be paying new vendors better or worse than the old vendors. Additional Payment experiences provide insight into past payment performance and recent experiences with nontrade accounts.

Experian calculates DBT for trade payment information classified as continuous and new. We also calculate a “combined DBT” which reflects the DBT of both continuous and new trade payment experiences. The DBT is available for the current month and historically through monthly and quarterly DBT trends to help identify timeliness of payment experiences over time.

I know that’s a lot of information, but I hope it it helped explain why a business may have more than one DBT. To see this information come to life a real business, check out the BusinessIQ Premier Profile.

In  recent posts I’ve written about the database where Experian data resides and the matching engine that brings it together.  Now, I’d like to write about one of the data elements that resides on the database and is seen on all of Experian’s commercial credit reports —  Days Beyond Terms (DB T).  To many it’s simple and straight forward but if you have questions hopefully I can provide answers.  So, let’s demystify DBT!

• Is DBT a credit score?  No
• Do you need a table to translate the DBT?  No
• Does DBT predict future performance?  Possibly
• Is it a point in time indicator?  Yes

The simple definition of DBT is the number of days beyond the invoice due date a business pays its bills.  So, if a business is supposed to pay its bills within 30 days and the business pays on day 37, the DBT is 7.  If a business pays before the invoice due date, the DBT is 0.

On Experian commercial credit reports, we aggregate the payment experiences from all trade payment suppliers in order to provide a DBT that’s reflective of all payment experiences.  This DBT is the dollar-weighted average number of days beyond the invoice due date that a business pays its bills. 

Experian also provides a DBT for select types of payment experiences such as newly reported (the first time a tradeline is reported to us) or continuously reported (a tradeline  with atleast one update within the last 90 days).  This will help determine if a business pays new suppliers better than others.

I hope this helps demystify the DBT.  If you still have questions, comment on this post.  If you have questions on another data element let me know as well.  Your question just may be the topic for a future blog.

All too often as credit risk professionals, we don’t take the time to evaluate our credit policies because “that’s how it has always been done around here”. Unfortunately, it is this sheer mentality that increases days sales outstanding, raises uncollectable debt and prohibits us from identifying  good growth opportunities.  Reviewing your policies early and often enables credit risk professionals to  create more sophisticated rules around how to extend credit.

One way to establish a clear cut set of rules around your credit policy is to automate your credit decision making process. I know when some credit professionals hear the word “automation”, they run the other way. Typically, two concerns come to mind: 1) A computer is going to take my job away OR 2.) Credit automation is too expensive!  Well – Guess what?  Neither of these is necessarily true.

Automating your credit policy simply allows credit risk professionals to focus on the important things that matter when making credit decisions. Ultimately – a good credit decisioning system allows good applicants to get automatically approved and the bad applicants to get automatically declined without getting you involved.  Your time is most efficiently spent on the accounts that need human intervention – applications that fall on the cusp of a decision. This analysis even a computer can’t do! 

Most credit automation tools have come a long way. The market now offers various ‘out of the box’ solutions depending on the level of automation desired by your company. Once a costly tool – now it’s a cost savings tool!

How do you know if your business is ready to automate your credit decision making process? Take this self-diagnosis test. If you answer “YES” to any of these questions – it’s time to pull the trigger on automated credit decisioning!

• Is your credit operation decentralized with multiple regional analysts making decisions independent of one another?
•  Are you having issues establishing an audit trail on credit line extensions?
• Are you finding inconsistencies on how analysts assign out credit limits?
• Do you think your credit analysts are spending too much time manually reviewing credit applications?

 If you answered ‘YES’ to any one of these questions – automating your credit policy just might be the solution you’ve been looking for. So what are you waiting for? Pull the trigger!

With Dreamforce 2011 around the corner, I thought I’d take the opportunity to blog about our ability to integrate our data into the mega Salesforce platform.  For those who aren’t familiar with Salesforce, it is best known for its CRM products, but has expanded to allow for external applications to be added onto the Salesforce.com platform.   Dreamforce is the biggest conference of the year dedicated to cloud computing. 

A year ago we partnered with Forseva, a ‘Top 40 Innovator’ on the Force.com platform to allow for our clients to manage credit, collections and sales information on the Salesforce platform.  Being able to integrate our robust business data into the Salesforce platform enables clients to help their sales organization better aligned with credit and finance organization within a business. 

Some key features are

-          Business verification-real time business verification to better qualify sales opportunities

-          Credit management -automate business decisions such as sales terms and credit limits based on credit data set through credit policies

-          Collections management – Create collections cases to track and manage resolution of payment issues and disputes. Automatically assign and notify dispute resolvers to expedite resolution. Track and escalate issues based on configurable workflow rules. 

If you are using Salesforce, let us know.  We can help you close the loop on the credit and collections process in your Salesforce CRM.  Here’s how to contact us for more info.

By the way, we’re sharing a booth at Dreamforce with Forseva this week!  Stop by booth#1518 and get a demo!

In my last post I was making the point that BusinessIQ is a cloud computing application but acknowledged that I’d have to lead into that claim with more explanation of the topic.  So here goes:

My computer is way dumber now than it used to be.  Despite discreet motherboard replacement surgery, memory supplements,  expanding storage and suffering through increasing license cost of the software I do run, my machine does far less processing now than it did ten, five or even two years ago.  And don’t think that newer mobile devices have a huge advantage- most of their power is devoted to the user interface.  Just as Woody would accuse Buzz in Toy Story 2 “That’s not flying Buzz, that’s falling… with style”,  the all-show-and-no-go display and rendering theatrics exhibited by our newest devices, though mesmerizing, aren’t computational heavyweights.  The browser software, Internet Explorer, Foxfire, Chrome, etc., is doing the work along with selected plug-in software I download for free.  Much of the intelligence resides now on the grid, in the cloud.  In the same turnabout fashion, the web that I use to pooh-pooh for all its catalog-ware and clubby message boards is now sporting some serious computational cred.   

As a fairly superstitious person, I have a great respect for providence, coincidence and the serendipitous occurrence, which is why I fell so hard on the story of the underpinnings of the Internet and WWW depending on an accidental benefit of the dot-com boom.    

In the late 1990’s during the dot-com investment boom, phone and cable companies, thinking that the world had seen the last of brick-and-mortar enterprises and would soon speed solely along digital superhighways, plowed serious cash into replacing dated copper wire with optical fiber.  These hair-thin strands of glass can move payload at the speed of light, allowing nearly unlimited quantities of data to travel long distances at a clip that keeps pace with the computer’s processor.  Voila! Computing could be centralized away from an individual’s desktop and delivered on demand without any loss of performance.  Now the Internet could link millions of computers and serve as one giant computer, the virtual world swaddling the physical world like a friendly fog- a cloud.  Applications that use to have to run locally either because they’re power hogs or because they need to schlep lots of data across the network could now stay put on their home servers and focus on evolving more cool features and functions.  Welcome Cloud Computing.  

Proving that the Cloud exists is the first part of the argument.  So what makes BusinessIQ part of the pantheon of cloud applications?  These defining characteristics of a cloud computing application are true for BusinessIQ:

1.       BusinessIQ is delivered as a service using the Internet

Experian, as a cloud provider, owns a dedicated on-ramp to the digital superhighway and BusinessIQ platform runs on servers in the Experian Global Operations Center in Texas.  As a BusinessIQ  customer, you don’t need to be concerned about these implementation details because you are accessing the application when you need it through your browser in the same way that you plug an appliance into an electrical outlet and begin drying your hair without really knowing or caring about where that current was produced or how it came to be exiting through the socket in your bathroom. 

2.      BusinessIQ   serves the needs of multiple businesses in a shared delivery model that tracks usage

In the same model as a public utility, where you are sharing the electric current with other customers, BusinessIQ is a shared service providing commercial credit management capabilities to our customers in a “multi-tenant” delivery model. 

The increasingly popular “industrialization of IT” has followed a similar route as other general purpose technologies in that they are now offered as a contractual service that your business can subscribe to instead of having to invest in acquiring the resources and building out the capability on your own- a costly and risky proposition.  Your buying decision and the risk associated, shifts from buying products (hardware components, software licenses, IT labor) to paying Experian to deliver these functions in some form of fee-for-use scenario. 

3.      BusinessIQ   is scalable and elastic, meeting your business needs  now and in the future

BusinessIQ  was purpose-built to grow and scale; i.e., it will support the large and complex needs of credit management professionals reliably and accurately, whatever the size of your portfolio or demand for credit information.   What’s more, though responding to business fluctuations can be burdensome, especially for internal support systems that may need to change rapidly (by providing more resources or fewer) BusinessIQ  is “elastic”, automatically responding to a changing environment.

With the indisputable proof of BusinessIQ’s cloud-ness lending clarity to the membership requirements in the cloud club, it would appear that we’ve been using Internet-based services on the home front for quite awhile now:  Internet search engines, email, photo editing, social networking, video streaming and more.  Is there still residual doubt about what is inherently virtuous about plugging into a utility for your business processing needs versus buying shrink-wrapped software off-the-shelf?  Beyond the access to the advanced capabilities of the software itself, does the delivery method or the classification of BusinessIQ as cloud-based offer any benefit?    

The answer in most cases is a definitive “yes”, there are clear advantages to acquiring a utility service-but it isn’t an open and shut case.  Benefits abound in the way of lower costs and greater flexibility but there are risks to consider with a shared service.  I’ll be back again soon to dive into the details of benefits and risks of cloud computing in my next post.

I have especially fond memories at this time of year of working with my grandfather as a painting apprentice during my summer vacations growing up. One of my jobs as an apprentice was using a putty knife to scrape the cracked old paint off of window sills and then sanding and priming them before applying a fresh layer of paint. Over the years I found a sharp putty knife made my work significantly quicker and easier. Although a dull putty knife would technically “work”, it made the job a real chore.

Similarly, while some generic risk scores might work pretty well, they may not be the best tool for the job. Ideally, risk scores should provide you with the most targeted insights to help you manage risk on accounts like yours. For example, if your portfolio is made up of commercial cards, it will be more important that a score identifies the accounts that are likely to go delinquent on card products than one that predicts that a business will go delinquent on a certain percentage of its total outstanding balance. Like using a sharp putty knife, product-specific risk scores can make your job easier and yield much better results.

To learn more about product-specific commercial risk scores, click here.