The Internet and the social web are changing how we communicate, connect, and collaborate—and the way we work in business credit. Hear from commercial credit pro Darrell Horton, Revenue and AR Manager for Shuffle Master, Inc as he explores the dramatic change in credit risk management that has already begun and his latest tips on leveraging the web for better risk management.

Note: For improved readability, I recommend YouTube’s HD setting as well as full screen.

Follow your customers on LinkedIn, Twitter & Facebook

The business world has rapidly embraced much of the consumer social web, with LinkedIn leading the charge. But don’t overlook Twitter and Facebook – many businesses have invested in these outlets as well. The combination of all three social networks give you the ability to not only know what your customers are saying, but also know what your customers’ customers are saying. LinkedIn recently added an expanded companies feature that has a wealth of statistics that can give you a feel for whether a business is expanding or contracting. By following a business on LinkedIn you can see recent hiring, departures, promotions and openings – all clues about the company’s existing financial health as well as potential future growth plans.

View your customers business location on Google StreetView or Microsoft Bing Maps 3D

I’m sure you’ve used Google or Bing Maps to get directions to a customer location, but one feature that’s often overlooked is Google Street View or Maps 3D. (See my office here) Google and Bing have amassed a massive collection of street level and bird’s eye view pictures and allow you to pan in different directions to get a complete feel of the surroundings. From a business perspective this extra level of information helps tell you whether your customer is in an office park, industrial complex, renting space above a restaurant or even working out of their house—all of which can help provide you with more insight as to the financial strength of your customer.

Monitor your customers’ social channels with TweetDeck, Seesmic, HootSuite, or CoTweet

There are a variety of tools that allow you to follow companies and track specific keywords across the major social networks. Tools like TweetDeck, HootSuite, Seesmic and CoTweet provide both desktop, web and mobile clients to help you manage the flow of information. All offer free versions and some offer premium offerings. You’ll find a broader range of features for the paid versions. Not only can you track your own brand, but you can search and monitor your customers.

Create alerts with SocialMention, Google and Yahoo

Obviously you can’t be in front of your computer all the time, so alerts are a great way to stay up to date. On this front you have a few options that range from free to paid monthly subscriptions—for these it depends on the type of information being monitored to determine cost. For public companies there is a wealth of free information from Google, Yahoo, MarketWatch and others – all enable you to build a portfolio of public companies and trigger alerts for free. For private companies Google and Yahoo will generally pick up web, larger media news sources and blog information, but for more in-depth information you’ll need to use a paid service. I’m obviously biased, but in the spirit of nearly free, Cortera offers a daily customer alerting service for only $99/month that focuses on payment risk, regional and industry news and growth opportunities. Recently called the “biggest ‘bang for my buck’ of any source that I have ever used“, Cortera can spot the downside and upside in your customer portfolio – all for thousands less than other solutions on the market. Another free service called SocialMention enables you to both set alerts and search in real-time across the major social networks, web and blogs.

Checkout the review sites like Yelp, Kudzu, TripAdvisor, CitySearch, InsiderPages and others

Rating and review websites have become a major intersection of consumers with local businesses. Instead of a professional critic rating a service, business or restaurant- – these communities enable members to provide their own commentary and ratings. The number of outlets grows every day along with the wealth of information provided on these sites. If you are interacting with smaller, local business, websites like Yelp, Kudzu, TripAdvisor, CitySearch, and InsiderPages are worth a search. You’ll definitely get a feel for what your customers’ customers are saying. On payment risk side we have the Cortera Credit Exchange which provides members with free access to ratings and reviews of how companies pay their bills. If you operate in specific industry, we also have groups or what we call Circles that you can join – you’ll receive alerts on how businesses are paying their bills from other users in the same industry.

All of these tools will help you become smarter about yours customer and will likely win you a few points as are able to easily converse about their current needs.

Have a website or source I missed? Please send them along for the group.

You can check them all out here, at our official contest site: www.thecomeback2010.com

We’d just like to take a moment to thank all of the entrants for their thoughtful submissions. We were genuinely moved by the amount of time, effort, and creativity that went into each of the entries, and we wish you all the best as you continue to drive your businesses forward.

Thanks again for spending time with us over the past few months, and we look forward to seeing all of you in the Cortera community!

Jim and Alex on stage demoing Cortera Circles. Create your Circle today! www.cortera.com

Here are just a few examples of Circles created by members since we launched – all sharing their credit risk experiences:

• “HVACR” Circle – A Group for the heating, air conditioning, plumbing and refrigeration industry.
• “Manufacturing & Distribution – Heavy Duty Truck and Trailer” Circle – A group for manufacturers and Distribution of Truck and Trailer parts for new and pre-owned trucks and trailers, both over the road and off-road truck and trailer equipment.
• “Sign Manufacturer” Circle – A group for the manufacturers of architectural signs.

I can’t help but think back to September 2009 when Cortera launched a community-based alternative to business credit reporting. Aimed at small businesses, who were often neglected from the credit reporting process, the service combined credit data with familiar social review and ratings functions — quite literally encouraging a crowdsourced approach to credit reports. The service became an instant hit with the press and a game changing, if not controversial, development in the 100+ year old business credit reporting market. With yesterday’s launch we are building on this successful community foundation while transforming risk management tools from static information solutions to dynamic, real-time social circles where people can share information. Traditionally organizing risk professionals into groups has been limited to the largest organizations. These groups, while highly useful in sharing credit information, meet only a few times per year and lack the efficient movement of risk information required to fully exploit the group’s organization.

The solution: Cortera Circles – A social extension to our platform that brings the tried-and-true – but often exclusive – concept of local and industry-based credit groups to the Web and the masses. Delivered as a free service, in a streamlined form, Circles can be created around a company, an industry or even project or job site–with each supplier and service provider providing their own unique perspective for ultimate financial transparency.

Create your Circle today and start getting the real-time insights you’ve always wanted from your most trusted peers.

Think of Circles as LinkedIn meets business credit reporting – the ease of joining a LinkedIn group meets the sharing of real deal/hard numbers of an offline credit group. Have a question about a business who you are about to extend credit? Now you can ask your peers with your own credit Circle. In just a few minutes you can create and invite your business friends and best of all it’s free to use and open to anyone. Need insights outside of your own network or entering a new market, simply browse the many existing Circles to the tap intelligence of thousands of others.

Business credit reporting, risk management tools and systems are hardly new – Cortera itself is one of the more successful providers of such solutions. But to date, such solutions run algorithms, business rules, and static, structured data feeds to help companies more efficiently identify risk. Cortera Circles will, in contrast, thrive off of ongoing and ever changing contributions and sharing between like-minded businesses. This dynamic information will be exclusively crowdsourced. Microgroups will serve the immediate needs of localized and project-specific audiences to provide insight into risks that are hyperlocal in nature and far too specific to be accurately addressed by traditional solutions. Today’s report-based solutions as point-in-time snapshots that immediately age—a result of decades old technology that has evolved little despite the social web’s impact on nearly every other aspect of business. In contrast, Cortera’s group sourced approach delivers a live risk assessment, continuously updated by the community.

Have a question about a business’s ability to pay their bills in a timely manner? We make it as simple as asking your Circle.

Finovate Events (www.finovate.com) take place each spring in San Francisco and each fall in New York and are uniquely known for their fast-paced environment, and for the caliber of its attendees: executives, entrepreneurs and industry experts from across the spectrum of financial and banking technology.

Cortera’s presence at FinovateSpring follows up on our success at the DEMOFall 2009 Conference where we launched the Cortera Credit Exchange, the commercial credit industry’s first online community dedicated to business credit ratings and reviews.

While we can’t yet give you details on what Cortera plans to present at FinovateSpring 2010, we can say that we plan to unveil the next major step in our effort to modernize and reinvent business credit reporting and financial risk management.

Stay tuned…

All of the major bureaus compile reports in the same way – voluntary submission of accounts receivable information from thousands of companies, on a monthly basis. Without these contributions, there wouldn’t be business credit reports as we know them today. This cooperation has yielded decent coverage, but we have a long way to go for the level of coverage we see with consumer credit reports.

Holding the full flow of info sharing back are internal policies on keeping information confidential, company culture, or even tactical reasons, like accounting systems that make it difficult to extract the information on a regular basis.

Why should your company contribute?

Data (Accounts Receivables or “Trade”) contribution programs have been around for decades. In the U.S. alone, thousands of businesses participate and benefit from such programs. Participation typically involves securely sending your accounts receivable to the bureau on a monthly basis. Trade contribution helps the provider and other creditors benefit from transparency in the marketplace through commercial credit reports. The more businesses that contribute trade payment experience information, the more likely that you will be able to identify customer payment issues early and proactively — and the better protected everyone is in the marketplace. The whole is indeed greater than the sum of the parts.

The primary benefit? You’ll likely get paid faster

Contributing to credit bureaus by providing trade information helps improve accounts receivables performance. By sharing payment experience you are improving the ability to set appropriate terms for credit extension based on actual payment experiences – ultimately improving the likelihood of customers paying on time. Companies are more likely to pay on time if they are aware that their payment experience is reported to the major credit bureaus, like (shameless plug) Cortera. It sounds simple, but most businesses take their reputations very seriously and will pay on time to avoid negative a credit rating. On the flip side, small businesses actually want you to report to help them build their credit report history.

Do you contribute to a commercial credit bureau? If not, we’d love to hear from you. In a future post I’ll answer many of the common questions people have about their contributions.

For example, in London, I spoke to a group of senior credit professionals about how the use of today’s social and web technologies are impacting the business credit profession. I expected (and got) a lively debate. For these types of conversations turned debates, I always start with: Who here, for business, uses Twitter? Facebook? LinkedIn? Hands go up with Twitter being the smallest and LinkedIn being the largest. Then I ask the simple question – who uses business credit reports? Everyone raises their hands. Now, who uses Google AFTER you pull a credit report to get more information about that business? All the hands in the room go up.

After several stories were shared about the how the free search actually revealed better insights, one comment caught me off guard. It was from perhaps the most senior person in the room in terms of industry experience, who shot out this: “Commercial credit bureaus, you are officially on notice – this is all going to be free one day, and we won’t be having this debate. There is going to be a better way. There has to, it’s only a matter of time.”

Back in the states, in New Jersey at a user group, I asked the same series of questions and got the exact same response. This time I’m interrupted by one credit manager with: “Who actually likes their current provider [he named the bureau]? Who thinks the data is up to date or accurate?” The whole room erupts into rants about how unreliable the information is for them. It’s not exactly a good sign when no one has anything good to say about their PAID information providers. This is especially rough to hear when you are one of the credit bureaus.

I then traveled to the Credit Research Foundation in San Diego and every conversation I have goes about the same – credit professionals are tired of the status quo. Over and over I heard from them that they are looking for something new.

I couldn’t agree more. Doing things the way we always have is broken. And it has always been broken. Only 10,000 businesses in the US contribute to commercial credit bureaus, yet there are 25 million businesses in the US – something is wrong with this picture.

We clearly need to do better. And while I think (shameless plug) that Cortera represents a significant step in the right direction. It’s only part of the giant leap we are encouraging the industry – and ourselves — to take in the near future.

Have a story to share about how you use the best of the social and free web in your credit decisions? Startlingly bad data from a high priced credit report? Suggestions on what the future of business credit info? Tell us below.

So if confidence is not behind the improving payment behavior, what exactly IS driving down delinquencies? While it’s hard to point to a specific answer in the data – and while one month hardly constitutes a sustainable trend – here are a few possible contributing factors:

1. Deadbeat Darwinism: We’ve said it before and we’ll say it again. The best way to ensure timely payments is to report, proactively deal with, and do the proper reference checks to avoid deadbeat clients and partners. With growing sensitivities to such risks and forums like our own Cortera Credit Exchange, which make it easy to ‘out’ such delinquents, small businesses may taking the necessary steps to avoid such problems. Serial deadbeats and companies in trouble are therefore less and less likely to be mucking up the system.
2. Past due debt off the books: Another flavor of deadbeat Darwinism, but this one at the tail end of the cycle. With little or no hope of recovery long outstanding debt – overdue bills – well past 90 days DBT, many businesses simply write it off. Thus, this delinquency data is no longer weighing on the average.
3. Improved credit management: Perhaps business owners are more sensitive to increasingly stringent lending conditions – and how business credit reports are built – given the notoriously risk adverse position and tight lending habits of banks these days. Maybe they’ve taken our advice and realized that the best way to self manage working capital in the absence of abundant credit availability is to ensure that they and their partners all pay their bills in a timely manner, thus optimizing cash flow throughout the entire system. Regardless of the reason, we may be witnessing an increasing emphasis on better credit management habits for Main Street.

As always, another month’s worth of data will go a long way toward sorting this out. But in the meantime, what do you think is contributing to a sudden improvement in timely payments? We’d love to hear your thoughts and ideas.