Opinion Piece: Improving your credit bureau business data for improved credit data
Credit bureaus play an important role in economic growth and stability, housing a wealth of information that helps credit providers to be more responsible in their lending practices. This, in turn, helps consumers and businesses to ensure they do not overextend themselves by obtaining credit they cannot afford. However, when it comes to ensuring their information at the credit bureau is complete and up to date, many small businesses are reluctant to update their information. There are many incorrect perceptions behind this trend, chiefly driven by misunderstanding of the role of the credit bureau. The reality, however, is that having an accurate credit profile can be a powerful business tool. Providing as much detail as possible and updating this information on a regular basis can help small businesses to grow and further their contribution towards the South African economy.
A business profile at a credit bureau consists of various elements, which are used for a number of different validations. The first aspect is statutory information such as registration information, contact number, address, auditors and executive committee. This information allows other businesses to confirm that your operations are legitimate and that you actually exist. A quick credit bureau check can help to reassure potential customers or suppliers of the legitimacy of the enterprise, but only if this information is accurate and up to date.
This data also includes the nature of the business, the industry of operation, products and services, business size, number of staff members, branches and so on. This information provides an idea of the level of stability with your operation, based on size and industry. Financial information and a general idea of sales turnover is also useful information to provide to credit bureaus, as it gives lenders a better understanding of affordability levels, gaps and possible limitations.
Ultimately, providing as much information as possible to credit bureaus can benefit businesses for a number of reasons, from expediting the credit granting process to aiding in tender applications and other business growth processes.. This can save valuable time and make your enterprise easier to do business with, negating the need for lengthy investigations.
In addition, having an accurate business profile with a credit bureau can assist with tenders, as the vetting process is drastically simplified when a company’s profile is up to date. Without available or up to date information there is a chance companies could lose out on a tender or have the process exponentially delayed, as customers will be unable to make a fast, informed decision.
Aside from these business challenges, having an up to date credit profile and managing your credit rating is critical when applying for credit from suppliers. Suppliers will be able to gain a better view of your ability to pay back credit, and enable them to lend responsibly and with lower risk. In addition you will often be able to access greater credit capacity. This can help smaller businesses to grow and increase their value, which in turn makes them a more attractive prospect for potential investors or buyers.
Building up a good credit profile shows trustworthiness and the ability to perform as a business, which is essential for growth. A sound credit rating is critical for access to credit, which in turn requires verified bank account details, financials, verified operations, legitimate principals running the business, and ultimately a recognised, authenticated and verified business. Updating business credit information is thus highly beneficial, both for businesses and their suppliers, from assisting with obtaining credit to acting as a business enabler. Updating your information is as simple as filling out a questionnaire, and the advantages outweigh the minor inconvenience involved.