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.

You’ve got a great idea, the capital and the know-how to make it happen. Yet entrepreneurial success also depends on something else many small business owners don’t pay enough attention to: your business credit profile.

Here’s a tip! Just as your personal credit rating has a big impact on your financial health, your business credit rating can help you get competitive business loan rates and terms. Having complete, up-to-date information on your business credit profile can help improve your credit rating…and maintaining a good credit rating is the best way to obtain favorable financial terms.

To obtain a recent copy of your business credit profile online, and to make sure it’s updated with accurate information on your business, visit BusinessCreditFacts.com. Click on the orange button that reads “Update my report”.

Ah, thought I was heading towards a bad joke?  Well, while it may be tempting to follow that through, I was really talking about trade payments needed to make a credit decision.  When I started in the data business all those years ago, my primary responsibility was to review credit reports all day.  I was taught to circle all the delinquent experiences, those beyond 30 days anyway, and then look at all the circled experiences to decide what type of rating to put on the business.

Usually after the first 20 or so (often less), you got a pretty good feel for how a particular business was going to pay.  You could have put 50 or 500 more experiences on that report, and my opinion, it wouldn’t have changed.  Given the amount of times I had to do that every day, I got very good at spotting trouble from just a handful of payment experiences.

A little while later I graduated to the world of credit scoring.  At that point, I began to realize that just focusing on how many trades were in the report wasn’t even the crucial issue.  The real value of credit scoring is the model development process that looks at hundreds of data elements, and observes thousands and thousands of businesses, to arrive at the most efficient set of data.  That is more powerful than just looking at the payment record, or worrying about how many payments there are in a credit report.

So, a suggestion?  Rather than thinking about the depth of trade you see on a credit report, think instead about what the score is telling you about the likelihood the business will pay severely slowly.  I believe you will end up in a better place.

As the summer heats up many of us are looking to take a break to enjoy our favorite summer activities.   While this break is well deserved (and essential for maintaining our sanity) it’s important to remember that the discipline around our credit decisions can’t take a break.  New applications still come in the door, products must be shipped and services must be performed   

This summer I am spending much of my “office time” working on a new credit report.  It’s my hope this report will help drive more informed decisions while freeing up your time to enjoy a well deserved summer break.   For years I’ve heard . . .

•  Do you have a fraud check right on the credit report?
• Do you have a credit limit recommendation on your credit report?
• How did the credit score look six months ago?
• What’s the NAICS code for this business?

Well, I’m happy to report we’ve listened!  The BusinessIQ Premier Profile answers all of those questions in one spot.  The report provides information needed to assess credit risk as well as the information to perform background checks.   Take a look and let me know what you think.  Will this report help you make more informed business decisions?  Did we free some time up for you to hit the beach or enjoy another fun summer activity?

We’re all aware of the increasingly bold moves fraudsters take to steal personal identities to secure jobs, cars, homes and more—but what about business-to-business fraud? As a small business owner, how much thought do you give to fraud protection for your business?

You have a lot to fear and even more to lose if you become a victim of commercial fraud. Approximately 30 percent of all business credit losses are attributed to some type of misleading or fraudulent information. Ultimately, financial damages from these and other business scams far overshadow losses from consumer fraud. View Experian’s white paper on Identifying Small Business Fraud to get more information about types of common fraud.

On average, losses are 3 to 10 times higher than personal identity theft damages. So, it’s time you become aware of business credit fraud. To learn more about protecting your business, and what to do if it falls victim to fraud, click here.

Summer vacations are in full swing and I can’t wait to spend some time at the beach with the family this summer. Since late payments and bad accounts never seem to take a vacation, I want to remind you of a couple of the tools we have available to help you manage your accounts.

1.      Register your accounts to be monitored and choose to be notified as events happen – everything from score changes, late payment warnings and public record updates.

2.      Run your accounts through a credit policy in batch format. This will provide consistent account review and give you the ability to act only upon those accounts with a decision or credit limit change.

3.      Last, but not least is regular account review though portfolio scoring.

Learn more about our account management tools – and hopefully regular account reviews can give you a vacation from bad accounts.

In my first blog posting I mentioned credit reports were the credit story of a business.  In this posting I’d like to provide you with some insights on the raw materials that are brought together to become the chapters within the credit story.

You may think it’s simple to compile information to create the story.  However that’s far from the reality.   There’s no tool that easily links payment information, public record filings or collection experiences from thousands of suppliers.   There’s no magic tool that scrubs and standardizes all the information.   If you’ve ever tried to combine data from multiple customer databases where there’s not a common link you’ve experienced the painful reality of what it takes to create the story.   The story is in the data but putting it together is the challenge.

At Experian, a team of magicians (a.k.a. data analysts and technology experts) come together and create tools that sift through information.  Through these tools and a bit of magic we determine what can be brought together to begin the story for a new business or add a chapter for another.  At Experian this process occurs within our BizSource^SM database using our TrueSearch^SM matching engine.    In my next blog I’ll share my thoughts on these powerful tools.

As a parent of two youngsters, it has dawned on me that managing the credit lifecycle is very similar to being a parent. In the beginning, whether it’s children or prospects, you’re doing everything you possibly can to research, learn, take care of and keep them out of harm’s way. As children age, similar to accounts, we tend to be more hands-off (teenagers and bad accounts prefer this approach), but both need managing/supervision. If things really go south, then there is the need for Collections or maybe boarding school, just kidding about the boarding school, but you get the picture. I don’t typically give parenting advice, but I am here to help you with your credit lifecycle needs.

1. Stay involved – regularly monitor and analyze your portfolio
2. Show some love to both your good and bad accounts – bad accounts need to be adjusted to reduce risk and good accounts might need more incentives to help them grow
3. Send the really bad accounts to Collections – it’s for everyone’s good

Learn more about our offerings – you’re on your own with the teenagers.

They say the future has a strange way of arriving on time.  As much as we want to ignore it, it still arrives.  The question then, is how well have you prepared for it?  One way you can get ready, is to get the information and tools you can rely on to make sure you are getting the insight you need.  These tools will put you in the best position to thrive when the inevitable occurs…that is, the future arrives.

I have experienced this in a big way with my 529 fund for the college educations of my two boys.  I blindly socked money away in it each month for years.  Then, one day, my oldest graduated from high school.  The future had arrived!  Lo and behold, I had enough saved to get him through!  Not only that, I am on track to get his younger brother through as well.  That little bit of advice I got from my accountant all those years ago—open a 529 fund—has paid off hugely for me.

I was reminded of this over the weekend when talking to my brother.  He is a small business owner, a great salesman for whom credit was barely even a consideration a few years ago.  In the recent downturn though, it’s become necessary for him to pay attention to credit to protect his business, and he asked for my advice on how to read a credit report. 

Teach a man to fish, and he can feed himself for a lifetime right?  Well, I directed him to an online resource that would help him learn how to understand an Experian business credit report.  He may have saved himself a bundle this past weekend thanks to this valuable insight.  And I am sure his new found skill will save him again with other slow paying customers.

 Amazing how preparing for the future can pay unseen dividends, isn’t it?

I’ve been on the road a lot these last few weeks visiting clients and prospects. While spending the night in the Dallas Fort Worth airport with storm warnings and getting stuck in Chicago wasn’t much fun, visiting and learning from clients/prospects always is. As the product manager for BusinessIQ, the information gleaned from these sessions has been critical in developing the product and continues to play a large role in the application’s evolution. We already have a busy Summer on tap with several product releases and enhancements planned.

Please keep the feedback coming. Click on the feedback link on the logged in BusinessIQ homepage and tell me what you like, what you don’t like and what you would like to see in the future. Together we can continue to develop and release the industry leading products you’ve come to expect from us here at Experian.