If you extend credit to other businesses, congratulations! You are a credit underwriting.
You just may not be doing it with great data.
Most B2B credit decisions happen on gut feel because, at least in the Cannabis industry, there are no great exists in silos.
Here is why professional CFOs contribute AR aging data to commercial credit bureaus in EVERY INDUSTRY:
- You get what you give. Bureaus run on reciprocity. Contribute your data, access everyone else’s. The data is anonymized so there’s no retribution. Sit on the sidelines and you are pricing credit risk as blind as a six-year-old, swinging at a piñata at a birthday party.
- Customers pay faster when they know you report. FACT. The dynamic that made FICO work for consumers works the same for businesses. Payment behavior becomes a reputation asset, and reputations are worth protecting.
- You see trouble before it hits you. When that customer who is paying you, and maybe other members of your association, on time, starts stretching three other vendors from 45 to 75 days, you want to know that before they stop paying you. Because they will. Shared data turns hindsight into foresight. Nice that they’re paying your neighbors, but wouldn’t it be better to know who they’re not paying?
- Your receivables become more financeable. Lenders discount bond AR heavily because they cannot verify the quality of your book. Logical. Reported, scored receivables tell a cleaner story and ultimately unlock cheaper capital. It may take time, but that is the process.
- You benchmark against peers. Is your 60+ or 90+ bucket worse than industry average or better? Without shared data you are guessing. With it, you are managing.
- You reduce write-offs. Every dollar of bad debt avoided is a dollar of margin. In thin-margin industries this is not a nice-to-have. These are 1005 cent dollars that come out of your pocket.
The objection we hear most is privacy and proprietary.
Reputable bureaus like Reklaim Credit Solutions use aggregated, anonymized/depersonalized tradelines.
Our clients are not sharing customer names with competitors. Of couse. not. They pool payment performance the same way EVERY bank pools mortgage data. The way EVERY vendor in EVERY industry shares AR data. Think about why they do this!
B2B credit is a coordination problem.
The businesses that solve it together will out-earn the ones that try to solve it alone.
Reklaim Credit Solutions is the solution for the cannabis industry.