Firms ‘could do more to guard against poor payers’

Businesses are failing to make use of publicly-available data that could protect their business from poor payers.

So says the Institute of Credit Management, a survey of whose members found that a quarter of those questioned do not use the payment performance data provided in B2B credit reference reports – despite the vital help it could provide in helping them avoid poor risk.

Nearly two thirds – 63% – of businesses were guilty too of not sharing payment performance data on their B2B clients with credit reference agencies – the very information that three-quarters of them rely on to make informed credit decisions.

Philip King, ICM’s chief executive, said it was puzzling that businesses are not engaging more with CRAs. “If you don’t know the complete financial picture of the business you’re trading with, how can you correctly assess the risks involved?” he asked.

He said it was especially disappointing how few share payment data: “It’s the very information they complain they never have, and yet they do little to help themselves. You would expect both positive and negative information to be passed on so other businesses can benefit from the agencies’ reports. Instead, it just builds up a confused picture of many businesses’ finances and can result in more companies not getting paid.”

The survey also showed a mixed response to the usefulness of payment performance data in assessing credit risk for businesses. Around 35% found the information of limited or no use at all to them, 32% said it was useful and only 16% said the information was invaluable.