Obtain Better Credit Data on Small Businesses 

Aug 30, 2022 | Blogs

Today’s digital technologies make it not only possible, but easy, to determine a company’s financial health. Here are four “As” (aka “ways”) that enable technology to help you gather the data you need to better protect and grow your business:

  • Automation – Digital credit applications allow you to obtain credit data from small businesses remotely. They also simplify the application process and give customers the instant gratification they seek by allowing you to make credit decisions in real-time. When a potential customer leaves your office or website without a credit decision, they may never return. But, with a digital application, you can prevent them from shopping elsewhere by extending credit and issuing payment terms right then and there. The customer simply completes the application and clicks “submit” to immediately initiate the automated decisioning process. And thanks to digitalization, a decision can be rendered instantly, displayed onscreen and followed up with an email confirming the approval or denial. It also reduces the number of applications requiring a manual review by flagging only those that need a human touch.
  • APIs – By using application programming interfaces, you can obtain the small business financial data your credit model needs – either internally or through a third party – to render more accurate credit decisions. APIs let you access data in real time only when you need it, which means they reduce the complexity of your system as well as the cost of application development. You can make changes to existing workflows or use API integrations to build more automation into your existing processes and systems. APIs also allow you share data with other vendors, departments and systems.
  • Artificial Intelligence – Credit models using artificial intelligence allow for greater accuracy, improved data quality and provide behavior predictions for the future. During the beginning stages of the process, the model is “trained” by giving it data from past applications. Then, as you use it for real-time processing, the engine learns from previous decisions. For example, if your model had been approving applications with credit scores that were borderline but then discovered they frequently became poor risks, it would then start denying these applications. The trick is to focus on those specific variables that can help the AI model predict outcomes such as credit losses, business failures and bankruptcies. It is also important to put your models through multiple rounds of testing to ensure they work properly before you use them in real-time.
  • Account Monitoring – When you have business account monitoring in place, you can learn of important negative and positive events in your customers’ credit profiles by monitoring data for changes to financial health, credit scores, payment behavior, public record filings, collections, and more. You can also receive customized, automated alerts on numerous criteria to help you identify emerging account risks and potential cross-sell and up-sell opportunities. You can detect early signs of trouble on your business accounts by being regularly notified as to the most recent negative changes to a customer’s financial status. Or you can learn when the owners or guarantors are having financial difficulties long before your profit margin is impacted. You can even score your portfolio to identify risks and opportunities to maximize profits, refine your credit policy and save time and money.

These technologies are readily available today and can arm you with the business and credit data you need to stay on top of your customers’ financials. With automation, APIs, artificial intelligence and account monitoring, your business will be well-equipped to thrive. Contact your Xactus strategic account manager to learn more.

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