When you first start out, it can be a daunting task to try and pick out which customers have the best chance of working well with your business.

Luckily, there’s a simple way to land your goal of building a base of reliable customers – check their credit scores!

So, what exactly are business credit scores and how do you determine which ones are good or bad?

Why business credit scores matter

CreditorWatch’s RiskScore tool generates business credit scores from 0-850 for every business in Australia. The score constantly updates, based on how well a business manages and pays its invoices. The higher the credit score, the lower the risk that the entity poses.

While what can be considered a safe or comfortable credit score depends on the type of customer and contract you’re working with. A good credit score typically lies above 500 and is considered the minimum standard businesses should look for when taking on potential customers or debtors.

However, it’s also important to consider how credit scores fluctuate, even for your current customers, who will not always have the same credit score as when they started out. The best-case scenario would be that their credit score has jumped up since you first started working with them, which would indicate they’ve been diligent in paying their debts.

On the other hand, if your customers have been behind on payments or taken out too many loans, this will eventually cause their credit score to dip, especially if it turns out they also have other infringements, such as payment defaults, court actions or bankruptcy notices.

If one of your customer’s credit scores ends up falling below their standard, chances are it’ll start to negatively impact your business and your own credit score as well if you don’t take immediate action on it.

While calculating and keeping track of all your current and potential customers’ credit scores might feel like a monumental task, it’s much easier to do when you utilise the technology and data already available in the market and is a worthwhile investment to ensure you protect your credit and the future of your business.

CreditorWatch provides the most accurate credit score in the market

Providing businesses of all sizes with incomparable insights and the most comprehensive data available, CreditorWatch is dedicated to helping your business thrive and make the best possible business decisions with the most reliable and accurate business credit scoring system in the market.

With our credit scoring system, you’ll have access to easy-to-read business credit score ratings and grades to be able to determine the credit score rating of any business within Australia in a matter of seconds.

From low-risk entities (businesses with good credit scores) to high-risk entities (businesses with bad credit scores), our RiskScore tool will automatically calculate your customers’ credit score range limit, helping to ensure you only work with customers that pose the smallest credit risk.

With 24/7 access to this comprehensive analysis, your business can work out the best contract terms, credit limits and more for each of your new and current customers more accurately and efficiently.

This includes being able to adjust for business factors such as a major high-value contract, which require stricter credit score terms, and smaller contracts, which have looser credit score requirements but stricter payment terms.

Likewise, through RiskScore, our unique business credit scoring system also considers all potential risks any new and current customer poses to your business, including how likely a customer can pay on time and their likelihood of default over the next months.

Combined with functions such as Payment Rating and Financial Risk Assessments, you’ll also be able to predict your customers’ payment behaviour and financial health, all based on up-to-date historical data and the most accurate predictive analytics.

For a more efficient and comprehensive way to minimise your business’s exposure to credit risk and work with the most reliable customers, contact CreditorWatch today!