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Credit Frequently Asked Questions ( FAQ's)
What is the purpose of these reports? What are they used for?
- Business Information Reports are used primarily as commercial credit tools. Business owners and managers look to these reports for vital information they need to determine reasonable assurance of payment from those businesses with which they intend to deal. No prudent business would be willing to ship goods, furnish services or extend credit without such assurance. Business Information Reports are also widely used in marketing to evaluate prospective customers in terms of sales potential; in purchasing to assure that prospective suppliers are established, sound and capable of delivering requested goods and services when promised; and in insurance underwriting to trace claims history, evaluate risks and establish realistic appraisals.
- Nobody is willing to conduct business on promises of future payments or future deliveries without some degree of assurance that they are dealing with reputable firms.
Who typically uses the information in these reports?
Manufacturers, wholesalers, retailers, both small and large businesses, and professional services. Just about any organization whose growth and profit depend on solid commercial relations depend on D&B information reports. Here are a few common examples:
- A supplier has received your first order for the goods or services you need to produce and sell your product. A quick look at your D&B report and the supplier can give the shipping department the go-ahead signal. Without this D&B reference, you could wait weeks for your order while a supplier checks bank records, trade references and makes inquiries about you around the industry.
- You call the bank for an appointment to talk about a loan. The loan officer looks at your D&B report and can immediately analyze the needs and progress of your business even before you arrive. The same applies when you need any insurance policy, financing or leasing terms on equipment — or even a business credit card.
- You've been dealing with the same supplier for years. Suddenly an expansion or special job requires you to double or triple the size of your order. An unusual situation in the eyes of your supplier — but one look at your D&B Business Information Report and the assurance is there that you can handle the increase and perhaps even qualify for a volume discount.
What does a rating of 1, 2, 3 or 4 mean?
After reading and analyzing the information contained in the Business Information Report, particularly financial statement information, the rating is issued by a D&B business analyst. The rating is divided into two parts: A letter designation indicates estimated financial strength (usually tangible net worth), and the numerical symbol indicates the so-called composite credit appraisal — ranging from a high of 1 to a “limited" rating of 4. The composite credit appraisal incorporates the manner in which the company meets its obligations, financial condition, proper legal organization, clear identification of ownership, management experience, payments and other factors.
What type of information can be found in a D&B report?
Reports are maintained on hundreds of thousands of businesses and contain the facts most frequently required in making a variety of business decisions. Basically, the report is an analysis of a commercial establishment.
- D-U-N-S® Number: D-U-N-S stands for Data Universal Numbering System, which is recognized by companies worldwide. This is a unique nine-digit code that identifies a business name and location.
- Summary: A concise, quick-reference analysis of the detailed information contained in the report. It includes the business' Standard Industrial Classification code (SIC), function, product line, principal executive, D&B Capital and Credit Rating, sales, worth, payments, number of employees, history, financing, condition and trend.
- Payments: Payment record, high credit, amount owing, amount past due (if any), selling terms and period of time since last sale.
- Finance: Statement of assets, liabilities, sales, expense and profit, along with any necessary explanation and a description of sales and profit trends (when provided).
- History: Names, past business experience of principals or owners and the legal structure of the business.
- Operations: Describes the nature of the business, its premises, products or services, classification of customers, percentage of cash and credit sales, number of accounts, seasonal aspects, number of employees and name of bank.
- Special events: Any recent changes of chief executive, legal structure, partners, control, location, and any incidents of business discontinuance.
- Public filings: Identifies any public record filings, such as suits, judgments, and record item updates and releases.
- D&B Capital and Credit Rating: An indicator of estimated financial strength and composite credit appraisal.
Does D&B have banking information?
The majority of our reports provide general banking information, such as bank names, addresses and telephone numbers.
Why doesn't D&B have more financial statements in its reports?
The only companies that are required to provide financial statements are public and non-profit companies. The majority of businesses in our database are privately held. The business analyst’s job is to demonstrate the benefit of providing information to D&B. In fact, we are the only company that successfully provides financial statements on privately held businesses.
Public companies in our database have current financial statements reported. Our data collectors are required to ask all private organizations for their financial figures when conducting interviews.
How does D&B verify that the principals are giving correct financials? Can’t a company make up its numbers?
The veracity of financials taken as part of a regular investigation on behalf of a subscriber is checked by:
- Confirming that the accounting firm is a legitimate firm registered with the appropriate registering body
- Ensuring net worth reconciliation is completed
- Confirming VGER validation of sales to employees
- Ensuring that ratings assigned follow the rating rules and regulations
How long is public record and bankruptcy information kept in the report?
Business failures (bankruptcies, proposals, receiverships, etc.) are kept for seven years. This means the company will carry a business or management record until the seven years are over.
Legal items (suits, liens, judgments, etc.) will stay in the report indefinitely or until we receive notification that it has been resolved (settled, dismissed, discontinued, etc.). The details of the resolution could come from the defendant, the plaintiff or directly from the courthouse. The details of the resolution are kept for one year.
On the Business Information Report, what's the difference between the last full revision date and the most recent update date?
The last full revision date is the date on which a full revision (including interviews) of the report was conducted. The most recent update date is the date on which either public record items or new trade have been added to the report. The most recent update may also mean that an interview has been completed in between the regular yearly update.
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