Tips & Advice for
Leveraging Business Data

Best Practices for Monitoring Your Credit Portfolio

Who Do You Monitor?

Organizations typically spend most of their monitoring time and energy on their largest accounts. There’s certainly merit to that, since resources are limited and surprises with your largest customers tend to leave the biggest bruises. When you have thousands of customers, however, your risk exposure becomes spread across a larger number of accounts. Your days of having a handful of customers producing a majority of your sales are likely in the rearview mirror. Now you have hundreds or even thousands of customers that spend a lot with you and you don’t have a personal relationship with them. That’s challenging enough, but what makes the stakes even higher is that more than 600,000 US businesses close their doors each year. That’s an average of 2,000 companies closing each day, some of which are bound to be your customers.

The emerging best practice is to leverage tools to monitor your entire customer base on two levels: individual accounts and the overall portfolio.

Individual Account Level: Leading companies are evaluating changes in every customer, big and small. They’re likely to follow up on the alerts in different ways based on factors such as the size of the customer balance and their payment activity, but they are also able to identify the useful nuggets pertaining to important customers that may have small current balances. Leading companies are also saving the history of alerts to support future credit decisions. Many of today’s small accounts become tomorrow’s large accounts and the alert history can provide valuable insight for that future credit risk management.

Overall Portfolio Level: Aggregating the individual account monitoring to an overall portfolio level is also providing companies with insights that help them improve risk management. Just looking at trends and benchmarks for the largest accounts in the portfolio can be misleading. It’s not uncommon, for example, for smaller customers as a group to have a higher risk exposure than larger customers as a group. Monitoring each segment separately and against the customer base as a whole can help avoid missing negative trends while providing a more balanced and complete view of the company’s credit policy performance.


How Often Do You Monitor?

Many companies are inconsistent in how often they monitor information about their customers (and prospects and suppliers, for that matter). Typically, the more informal the monitoring process, the more the variation in the frequency and timeliness of alerts. If your monitoring entails reading the weekly industry publication for news on customer events, you’re probably not doing that the moment the publication arrives. You’re getting to it as quickly as possible, but there are often other priorities to be completed first. Plus, the more layers that exist in the process of the monitoring, the longer it takes for the information to get to you. By the time a bankruptcy filing or news article announcing a plant closing is picked up by the publications you read, days or weeks may have passed.

Companies that are most on top of monitoring strive to gather information as close to the source of the data and as close to real-time as possible. This provides the timeliest delivery of insights so that they can be the first to know about customer changes and react, if necessary. Not all alerts need to be followed up immediately, but receiving the information as quickly as possible puts the decision power for follow up in the hands of the users. Leading companies are using this time advantage as triggers to be the first mover to tighten or loosen credit limits and to pursue collections of late paying customers.

How Broad Are The Data Sources You Use?

In the old days, we monitored bankruptcy filings, read as many industry publications as possible and perhaps did quarterly portfolio scoring to look for changes in payment behavior. Receiving timely information on risk signs such as bankruptcy filings and payment score declines has been helpful but these conditions are typically lagging indicators of increasing risk exposure. With more and more data available electronically, there’s a wealth of new information available to us. The decreasing costs and increasing power of computing are helping to create new analytic insights previously hidden in the raw data.

Many companies are now incorporating new data sources into their risk monitoring to provide leading indicators about companies such as:

  • purchase trends
  • sales trends
  • investments
  • hiring trends
  • organizational changes
  • acquisitions
  • other business events



Changes in these areas can often provide clues (months in advance) of a significant financial stress situation like a bankruptcy filing or severe delinquency. As an example, identifying significant, persistent declines over time in a customer’s largest expenditures may signal declining sales and production which can tip off their future ability to pay you. On the other hand, increased hiring, spending and opening of new locations could be cause for an evaluation of a proactive credit limit increase.

How Automated Is Your Process?

The new challenge that credit managers face is how to efficiently leverage insights from this ever-expanding sea of data without drowning. Trying to accumulate, process and evaluate the available information has outstripped most companies’ resources. The choice is to either incorporate more automated tools into the process or run the risk of competing with late and limited information.

Companies at the front of the automated monitoring curve are relying on third-party information solution providers along with obtaining improved business intelligence from their internal systems to access more insights in a fast, cost-effective manner. The factors in implementing these solutions include:

  • Timeliness of the information – how close to the source of the data can we get?
  • Actionability of the insights – how easily can we interpret what it means?
  • Ease of incorporating them into existing processes


Alerts delivered through email are currently the most popular form of notifications but companies also need an application to organize, further analyze and store the alerts.

What Is Your Follow Up Procedure?

When companies had limited sources of information and types of alerts on customers, follow up could be a largely manual process. As the volume and types of alerts increase and the insights become more sophisticated, companies will need new ways to put the alerts into action. For alerts on individual companies, this means creating new scorecards that consider internal account information (order and payment history, etc.) with the alert details, prescribing a follow up action and either routing the treatment to the correct person or actually automating the follow up.

Early adopters of advanced monitoring are utilizing automated workflow in this way. Many others are working their way along the automation scale by using applications to forward alerts to the right person for follow up and tracking the results. This outcome data will provide feedback on the cause-and-effect relationship between the alerts and future credit risk with their customer base that will in turn provide the basis for automated scorecards and routing.

5 Keys for Your Portfolio Monitoring Success:

  • Monitor ALL Customers
  • Daily Alerts
  • Automated Tools
  • Workflow Process
  • Formal Follow Up Procedures


CORTERA AS AN EXPERT

For too long the world of commercial credit has been too complex and way too costly. Cortera is shaking up the business credit information industry with refreshing and innovative solutions. We turn a flood of business data on private companies into clear and actionable insights. Cortera helps you reduce the risk in your A/R portfolio, and identify the profits within your customer base.

Take advantage of this special opportunity to test-drive the Pulse application for 10 days, FREE!

During your 10-day FREE, Full Version Trial of Pulse – you’ll be able to:
  • Monitor an unlimited number of customers;
  • Assign an unlimited number of users to access the data;
  • Receive a daily alert summary email;
  • Access your monthly CFO Report with Portfolio trending;
  • View important insights on your Top 50 accounts.
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What Kind of Credit Risk Professional Are You? NACM Credit Congress Survey Results

Most occupations have their own stereotype – think of the accountant [Angela from The Office], the brainy but beautiful homicide detective [Kate Beckett in Castle] or the savvy, debonair advertising exec [Don Draper in Mad Men]. What’s the stereotype for the Credit Risk Professional?

We came up with two: the relational, affable, but more traditional Shay Cands[Shake Hands]  and the more serious, data-driven, innovator Anita Ansa

[I need an answer!].

Which one did the NACM Credit Congress attendees identify with more? Anita Ansa.

In fact, the data-driven approach to managing credit/risk beat out the traditional approach 2:1. We don’t want to speculate as to what this means,  but with the squeeze on credit managers to do more with less combined with new technologies and better data sources, the profession may be turning a corner when it comes to assessing risk. Where do you fit? See the InfoGraphic here.

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Solving the Credit Risk Dilemma: When Traditional Credit Data Isn’t Enough

To  extend or not to extend?  That is the question – at least when it comes to credit. It’s an even more important question now – in today’s uncertain economy as companies are getting ‘back to business’ – buying and selling. The pressure is on credit and risk professionals to make the right call.

Unfortunately, traditional credit data – based on a company’s payment behavior – is a lagging indicator of a company’s financial health and overall credit worthiness. In fact, more often than not, it tells you what you already know. Purchase behavior, on the other hand, is a leading indicator of a company’s financial health. What a company is buying, how much it’s spending and when it’s making those purchases reveals a pattern of behavior that provides much deeper insight into the financial health of a company.

Check out the latest eBook, Business Behavior Insights: Where to Turn When Traditional Credit Data Isn’t Enough, to learn more about how credit and risk professionals are leveraging business behavior data to gain a clearer view of a company’s financial health.

In this eBook you’ll discover:

  • The advantages of B2B purchase behavior vs. traditional credit data
  • Why B2B purchase behavior is a leading indicator of a company’s financial well-being
  • How to get B2B purchase behavior insights

 

Get a sharp and timely view into what customers and prospects buy and how their buying patterns change over time to obtain a powerful new measure of a company’s financial health.

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3 Ways Credit Pros Can Become Sales Heroes


Reduce Risk and Drive Revenue:  The former may be the goal for the credit department, but the latter is the goal of any business. Armed with the right data, credit and risk professionals can change the game by not only reducing risk, but also contributing to the sales effort.

So what’s the hold up?

Businesses have long relied on conventional credit data to evaluate the risk of potential and existing customers. This data has been the sole source for determining the financial solvency of prospects. However, credit and risk professionals now have access to data that reveals not just how a company pays – yielding a credit score – but how it behaves across multiple dimensions. Like consumers, businesses aren’t static and are defined by behaviors – how it pays, what it buys, how it invests, who it hires and fires, how it conducts business across multiple categories captured in news, blogs and other social media – as opposed to demographics or credit history alone. With a 360˚view into these behaviors – or business life events – credit and risk professionals can now not only better determine where the risks are – and avoid them – but also identify opportunities to upsell to existing customers – or find completely new sales opportunities.

Drive New Sales

A first step in selling more is seeing more, i.e. to have a better handle on a prospect’s behavior early on in the sales process – often before a sales call is even made. Business behavior insights provide organizations with a more robust view of a company’s financial health. The details and trends revealed in a customer or prospect’s spending areas can adequately tell if that company is growing or failing, expanding or downsizing, or in status quo health. From that information, companies can connect the dots and prepare for their next move. In sum, this gives companies a clearer, more accurate picture on which to base important decisions.

Perhaps more importantly, having a behavioral profile of your existing accounts can help you determine what types of companies you should be actively pursuing – the ones that look and act like your existing customers and have a propensity to buy your products and services. This will help you guide sales to targets that promise to be more profitable in the long terms and a shorter sales cycle the short term.

Find Ripe Upsell Opportunities

An existing customer is 45% more profitable than a brand new one, according to recent survey by InsideView. You not only want to retain them, but you also want to sell them more stuff. So actively monitoring the business behavior of existing customers will show you timely upsell opportunities – are they increasing their spend in shipping? Transportation? Has their spend in business services suddenly increased – perhaps signaling the opening of a new plant/office? Letting your sales team know about these sudden positive shifts in behavior can empower you to become a key sales resource and growth driver.

Better Risk Reduction: Leading vs. Trailing indicators

Another benefit of business behavior data is its ability to signal a company’s demise before traditional credit reporting systems. For example, one company recently announced closing its factory doors. Stand-alone conventional credit scoring gave creditors no inkling of the company’s collapse. In fact, the company’s credit ratings had consistently portrayed solid credit-worthy performance for years, and there was nothing revealed from the company’s public-facing information to signal any areas of weakness. This gave suppliers a false sense of confidence and led them to continue extending credit to the company that was about to close its doors.

By itself, the credit data did not paint a complete picture. However, behavior data raised three major red flags within the failing company. First, there was a decline in materials spend. A sudden drop in materials purchases can indicate an anticipated drop in manufacturing volume due to weak sales or declining orders.

The company also showed a decline in shipping expenditures. Seeing the trend in regard to shipping expenditures over a period of three to five years can demonstrably illustrate a company’s financial health or expose any glaring vulnerabilities. A drop in shipping can translate into a reduction in manufacturing output, weak sales, or both.

The third red flag identified was a decline in operations spend. Every business requires a broad variety of products and services to support normal business operations, from paper clips to printer cartridges to computer maintenance. A drop in this area represents a slowing of business, efforts to conserve cash, or both.

Traditional data for risk decisions is based on payment decisions. However, users of behavioral insights do not assign a customer or prospect to a single, overall score. Instead, these behavior-based insights provide a wealth of clues, which can be used to predict future behavior.

Like many positions within today’s organizations, the role of credit managers and financial executives is evolving with a deeper emphasis on providing other departments – like sales – with information to help them improve their pipelines and close deals. Credit data continues to serve a purpose – but acquiring deeper insights from business behavior data not only helps credit and risk professionals avoid risk, but also equips them to be sales champions as well – a win-win for the individual, the department and the company as a whole.

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How CFOs Use B2B Purchase Behavior Data to Increase Revenue and Reduce Risk [Webinar Replay]

Jim Swift, CEO, Cortera

Traditional data does not provide sufficient insight into the financial health of your customers or prospects – it serves as a lagging indicator. Business behavior – what companies buy, and how that behavior changes over time – is a leading indicator of a company’s overall financial health. Learn how how business behavior insights was used to predict the demise of Mayville Products Corp. 12-months before the company closed its doors and how a Global 3PL is using behavior data to increase annual revenue 10%.

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3 Ways B2B Purchase Behavior Data Will Change Credit Management

B2B purchase behavior data is rapidly becoming a highly-valuable corporate asset—a game-changer that is dramatically improving risk management by providing visibility into the blind spots created by traditional credit management systems. It can also serve as a powerful new engine for revenue growth. The potential impact to business includes:

1. Adding a revolutionary new dimension to credit and risk management

While credit and payment history is a useful factor in defining a current or potential customer’s financial health and credit worthiness, purchasing behavior—what companies buy—is a new breakthrough that offers up timely insights into your customers’ and prospective customers’ overall financial health; and that can, substantially streamline the credit application process. As a leading indicator, purchase behavior data can reveal hidden financial strengths or detect troublesome financial trends months before they show up in traditional credit and payment reports. By combining payment and purchase behavior data, your credit managers can, for the first time, rapidly and confidently identify your most valuable customers and prospects, and accelerate credit processes.

 2. Enabling a smarter, more effective allocation of both credit and sales resources

Credit analysis and sales prospecting too often require laborious searching through databases and other information. In assessing information overload, an Aberdeen report found that on average, salespeople in companies studied spent the equivalent of 200 hours per year in non-productive time in search of customer data.

As a more accurate financial barometer, B2B purchase behavior data is being used by sale, marketing and credit professionals to improve the effectiveness of the two-way relationship between sales and finance, while also saving time for both functions. Sales gets deals approved better and faster, and finance can alert sales to up-sell opportunities with customers that deserve higher credit limits.

 3. Creating a deeper understanding of customer potential

With purchase behavior details on a wide range of products and services, you can more thoroughly profile each customer. You’ll have the means to accurately gauge your current and potential “wallet share” with a specific customer for your class of product, and also see details about the customer’s payment habits with companies like yours.

The details and trends revealed by B2B purchase behavior data can tell you if a company is experiencing growth or decline… if it is expanding and adding personnel, or contracting and treading water financially.  Armed with this data breakthrough, leading companies are learning more about their prospects, customers and suppliers than they ever thought possible and are using this data and insight to dramatically reduce risk, improve sales and marketing effectiveness and increase revenue.

Download Is B2B Purchase Behavior The Ultimate Credit Barometer? and learn how B2B purchase behavior data signaled the demise of Mayville Products Corporation several months prior to any decline in the company’s traditional credit rating.

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5 Essential Characteristics of Purchase Behavior-based B2B Credit Solutions

A new solution category would not be complete without a buyer’s guide or tips on “how to purchase.” So, as the pioneers in B2B purchase behavior data solutions, we felt obligated to validate the category with a list of “must have stuff” you should look for in a purchase behavior-based B2B credit solution.

To provide practical, sustainable value to credit managers and financial executives, an ideal purchase-based B2B credit solution prescription must incorporate five essential characteristics:

 1. A vast, whole-market data set: The creation of a massive volume of accurate company purchasing behavior information depends on securing data from a wide variety of reliable sources. This assures broad portfolio coverage—including virtually all of your customers, prospects, suppliers and other companies of interest.

 2. Categorized purchasing information: This means segmenting B2B spend into meaningful categories, such as shipping and transportation, raw materials and business operations, as well as key subcategories. Not only is a company’s spend in each category important, but the relationship between spend categories provides a higher-order analytical insight; telling you what they’ll likely purchase in the future, as well as the trend of their general financial health. This clearer, more complete picture is extremely valuable when making credit and risk-related decisions.

3. Intuitive and actionable data presentation: To be of significant value to credit professionals, as well as to sales and marketing managers, B2B purchase data must be organized and presented in a form in which volumes of information can be received and understood with just a glance. Trends and scores must be brought into sharp focus to empower smarter, faster decisions.

 4. Ability to detail individual companies: The solution must offer a deep range of report options to enable users to easily drill into the purchase behavior details of individual customers, prospects and suppliers.

 5. The means to easily append customer records: The constantly updated purchase behavior data collected for individual companies must be easily integrated into existing databases and credit application processes. Users should find it easy to incorporate purchasing insights into business processes and systems through batch file appends and system-to-system XML interfaces. The new, expanded information should be easy to access whenever, wherever and however it’s needed.

Download Is B2B Purchase Behavior The Ultimate Credit Barometer? and learn how B2B purchase behavior data signaled the demise of Mayville Products Corporation over 12 months prior to any decline in the company’s traditional credit rating.

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Where do you turn when traditional credit data data isn’t enough?

Increasingly, credit managers and financial executives are recognizing the limitations of conventional B2B credit data based on historical payment habits and are complimenting it with B2B purchase behavior data—what companies buy. Unfortunately, extensive financial information on the vast majority of companies has never been readily available. Of the approximately 27 million businesses in the US, some six million have employees. And of these, fewer than 15,000 are public. That means the vast majority of the companies with whom you are likely to interact are privately held, so much of their most valuable business information is not available.

How do you sort through prospective customers to determine credit worthiness? Just as important, how can you tell which of your current customers could be spending much more with you, and which ones may be in financial retreat?

Chances are you strive to make these tasks easier by using a variety of traditional tools and information sources. You may subscribe to any number of information sources that provide company credit and payment history, as well as information about business demographics such as markets served, estimated revenue (or actual revenue, in the case of publicly traded companies) executive contacts, and locations.

You can also forage for additional information by searching the internet for publicly available information on targeted business categories, or on specific companies. Such searches yield a wide range of information sources, including company press releases, news articles, industry research and surveys, analyst reports and government studies. Then, there are new generations of business intelligence and enterprise search applications that can increase the volume of available company information even more, organize it more efficiently, and streamline access and sharing.

But, does simply adding more data to your credit analysis process improve your understanding of companies’ financial health? If you’re amassing conventionally available business information, the answer is almost certainly no.

That’s why a growing list of forward thinking companies across diverse industries are realizing how the predictive power of B2B purchasing behavior data adds a new dimension to credit analysis. Conventional payment data will always have its place, but the manner in which companies. spend their money speaks even greater volumes about their priorities, direction and overall financial health. The details and trends revealed in key spending areas can tell you if a company is experiencing growth or decline, if it is expanding and adding personnel, or contracting and treading water financially. Think about it. If a manufacturer shows a sharp decline in its purchase of raw materials or shipping services, it could be experiencing financial problems.

This revolutionary approach has drawn the interest of a number of savvy industry analysts, including Bill Warmington of Raymond James and Associates, who said, “We believe that this type of data will significantly improve a user’s ability to 1) model credit risk because purchase behavior is a better leading indicator of a company’s health than payment behavior, and 2) analyze its best customers in order to find prospects with similar characteristics.”

Download Is B2B Purchase Behavior The Ultimate Credit Barometer? and learn how B2B purchase behavior data signaled the demise of Mayville Products Corporation several months prior to any decline in the company’s traditional credit rating.

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How to Use B2B Purchase Behavior Data to Predict Business Failure

Credit and risk management executives across diverse industries are becoming increasingly aware of how gaps and blind spots in traditional B2B credit data are creating unnecessary business risks.  To fill in these gaps, forward thinking credit teams are marrying B2B purchase behavior data—what companies buy—with traditional credit data—how they pay.

The following case study demonstrates the power of B2B purchase behavior data and how it signaled the demise of Mayville Products Corporation over a year before traditional credit reporting systems signaled a decline in the company’s credit rating.

The decline of Mayville Products Corporation: a tale of two companies

On January 20th of 2012, the Mayville Products Corporation of Mayfield Wisconsin announced that it would close its factory doors at the end of March and lay off all 130 of its employees. For a year and a half prior to this announcement, two different sets of financial information revealed two dramatically different pictures of the company’s fortunes.

For most suppliers and creditors, the collapse of Mayfield Products must have come as a jarring surprise, since the company’s credit ratings had consistently portrayed solid credit-worthy performance for years. And nothing in the company’s public-facing information revealed anything alarming which likely gave unsuspecting suppliers a false sense of confidence which led them to extend credit to Mayville.

Company View #1: Business as usual
For most suppliers and creditors, the collapse of Mayfield Products must have come as a jarring surprise, since the company’s credit ratings had consistently portrayed solid credit-worthy performance for years. And nothing in the company’s public-facing information revealed anything alarming which likely gave unsuspecting suppliers a false sense of confidence which led them to extend credit to Mayville

The predictive power of B2B purchasing data adds a new dimension to credit analysis

Conventional credit data will always have its place, but the manner in which companies spend their money speaks even greater volumes about their priorities and direction. The details and trends revealed in these spending areas can tell you if a company is experiencing growth or decline, if it is expanding and adding personnel, or contracting and treading water financially.

Download Is B2B Purchase Behavior The Ultimate Credit Barometer? and learn more about how  B2B purchase behavior data is being married with tradition credit data to reduce business risk increase revenue.

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Do your sales prospects all look the same?

Companies are like stars.  From a distance, they all look very similar, but upon closer inspection, we discover our customers, prospects and suppliers are unique in many ways and represent a variety of different revenue opportunities and business risks.  Until now, B2B marketing, sales, finance and credit professionals have viewed companies through traditional data lenses which deliver limited and often inaccurate images of the businesses they interact with every day.  Customers and prospects are typically profiled, targeted and evaluated based on four primary attributes:

  • What they do—which industry are they and are they likely to by my product or service?
  • How big they are— what is their revenue?
  • How healthy they are— are they growing or in financial retreat?
  • How likely they are to pay—or, more importantly how well do they pay companies like mine?

Since 1937, we’ve used Standard Industrial Classification (SIC) and North American Industry Classification System (NAICS) codes to determine what companies do, but unfortunately, these classifications can be inaccurate, misleading or lack the granularity needed to truly determine which business a company is in.  We typically associate a company’s size with revenue, which is relatively easy to find on the 15,000 U.S. public companies, but near impossible to find on the 5,985,000 companies that are privately held.  To compensate for the lack of data on private companies, we make assumptions and build sophisticated models to estimate revenue which is also fraught with inaccuracies.  A company’s ability to pay is typically measured via a risk score which is a trailing indicator that gives us insight into how company has paid in the past rather than how well they’ll pay you in the future.

Does your traditional data improve your sales and marketing efficiency?

As you process this waterfall of inaccurate data on customers, prospects and suppliers, how much more do you really know—even about companies with whom you have frequent business transactions?  Does this information—which is costly to acquire and manage—significantly improve your sales and marketing efficiency, boost your revenues, or reduce your risks?

If you’re still amassing conventionally available business information, the answer is almost certainly “NO”.

Conventional business information tools provide too much information, irrelevant information or simply lack the key information needed–especially on private companies.  The image of our customers and prospects that emerge are incomplete and reveals very little about a company’s true financial value to you– now, or in the future.

Take a page from the B2C marketing playbook

When it comes to customer analytics, the business-to-business world is long overdue in borrowing a page from the innovators in business-to-consumer sales and marketing.  Ever since the broad adoption of credit and debit cards, retailers have employed increasingly sophisticated methods for capturing and analyzing consumer purchasing habits.  Through data mining, pattern detection, “market basket” analysis and other techniques, they have dramatically improved their ability to identify premium customers, improve cross-selling opportunities, predict future purchasing behavior and enhance overall sales and marketing effectiveness.   For instance, marketing and sales professionals can correlate a customer’s purchase of a minivan with the purchase of diapers, car seats, and a constellation of other child-centric products and services.

Imagine the same advantage in the B2B world

As with consumers, the manner in which companies spend their money speaks volumes about their priorities and direction.  If you had a view into that behavior you would ideally see purchasing data for raw materials, shipping services, and an array of business supplies and services.  The details and trends revealed in these spending areas can tell you if a company is experiencing growth or decline… if it is expanding and adding personnel, or contracting and treading water financially.

Such spending data simply hasn’t been available until now.  Fortunately, Cortera has opened this treasure trove and made it accessible to growth-minded companies for the first time.  To learn more about the power of B2B purchase insights, download our free white paper: Is B2B Purchase Behavior The New Revenue Lever?

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New Mexico Businesses Tops in Late Payments, Hawaii a Close Second

New Mexico businesses on average are the slowest at paying their invoices in the nation. According to Cortera’s monthly report on businesses accounts receivable debt past due by state for July 2011, New Mexico businesses are 23.16% past due making them the slowest in the country. New Mexico businesses have been in the top 5 slowest payers group for all of 2011. Alaska tops the most current list at only 7.15% past due – a position it has held for over a year. The top 10 lists are below.

Top 10 States with the most amount of businesses accounts receivable debt past due (July 2011)

State % Business A/R Debt Past Due
New Mexico 23.16%
Hawaii 23.11%
Florida 22.85%
Wisconsin 22.62%
Colorado 22.05%
Washington 21.60%
Missouri 20.98%
Oregon 20.92%
Minnesota 20.42%
Connecticut 20.32%

Top 10 States with the least amount of businesses accounts receivable debt past due (July 2011)

State % Business A/R Debt Past Due
Alaska 7.16%
West Virginia 9.38%
Utah 9.98%
Kentucky 10.65%
North Dakota 10.81%
Maryland 11.57%
Pennsylvania 12.31%
Rhode Island 12.85%
Ohio 13.06%
Virginia 13.22%

The Cortera Past Due by State Report tracks late payments of businesses within each state against agreed upon terms, measuring the percentage of late accounts receivable by state. This monthly report of accounts receivable (A/R) activities by state measures the payment activities of approximately 20 million public and private business locations.

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Latest Cortera Supply Chain Index Steady Near Historic Lows

We just released our July 2011 Supply Chain Index (SCI) report, a monthly index of accounts receivable (A/R) activities covering manufacturers, distributors & wholesalers, retailers, services, and transportation companies. Measuring payment activities of approximately 200,000 businesses, the July 2011 SCI registered 6.16 days beyond terms (DBT), remaining near its record low of 5.05 in May 2011. The latest numbers show that US businesses continue to pay their invoices in a timely manner – the best we’ve seen since the index was introduced in April 2007.

Businesses are currently paying their bills fast in part because they are confident they will continue to get paid equally fast by their existing customers. However, they don’t appear to be investing aggressively because of mixed economic news and fears over another recession. Overall a conservative, wait and see approach to their working capital management.




A three year view of the Cortera Supply Chain Index and other industry data and figures are available on Cortera’s Market Trends website.

Media Inquiries: please contact Alex Coté at 857-403-1370.

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Florida Businesses Tops in Late Payments for Second Straight Month

For the second straight month Florida businesses on average are the slowest at paying their invoices in the nation. According to Cortera’s monthly report on businesses accounts receivable debt past due by state for October 2010, Florida businesses are 24.21% past due making them the slowest in the country.  On a positive note, Alaska tops the most current list at only 6.51% past due – the only state below 10% past due.  The top 10 lists are below.

Top 10 States with the most amount of businesses accounts receivable debt past due (October 2010)

State % Business A/R Debt Past Due
Florida 24.21%
New Mexico 22.45%
Minnesota 22.44%
Oregon 22.30%
Illinois 22.04%
Hawaii 22.00%
Oklahoma 21.87%
Georgia 21.70%
Indiana 21.49%
Wisconsin 21.20%

Top 10 States with the least amount of businesses accounts receivable debt past due (October 2010)

State % Business A/R Debt Past Due
Alaska 6.51%
Wyoming 10.52%
Utah 10.53%
Maine 10.56%
South Dakota 11.40%
Louisiana 11.70%
New Hampshire 11.94%
North Dakota 12.71%
Mississippi 13.41%
Vermont 14.05%

The Cortera Past Due by State Report tracks late payments of businesses within each state against agreed upon terms, measuring the percentage of late accounts receivable by state. This monthly report of accounts receivable (A/R) activities by state measures the payment activities of approximately 20 million public and private business locations.

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Florida on Top of Business Late Payments by State, Michigan a Close Number Two

It’s not exactly the title you want to win, but Florida businesses on average are the slowest at paying their invoices in the nation. According to Cortera’s monthly report on businesses accounts receivable debt past due by state for September 2010, Florida businesses are 23.91% past due making them the slowest in the country. Michigan came in number two at 23%. On the bright side, businesses in states like Alaska, Wyoming and Maine remain below 10% past due. The top 10 lists are below.

Top 10 States with the most amount of businesses accounts receivable debt past due (September 2010)

State % Business A/R Debt Past Due
Florida 23.91%
Michigan 23.00%
Oregon 22.48%
Minnesota 22.41%
Illinois 21.75%
New Mexico 21.75%
Hawaii 21.54%
Indiana 21.19%
Washington 21.00%
Georgia 20.81%

Top 10 States with the least amount of businesses accounts receivable debt past due (September 2010)

State % Business A/R Debt Past Due
Alaska 6.90%
Wyoming 9.92%
Maine 9.93%
South Dakota 10.87%
Utah 10.92%
North Dakota 10.96%
Louisiana 11.23%
New Hampshire 11.88%
Mississippi 13.19%
Kansas 14.13%

The Cortera Past Due by State Report tracks late payments of businesses within each state against agreed upon terms, measuring the percentage of late accounts receivable by state. This monthly report of accounts receivable (A/R) activities by state measures the payment activities of approximately 20 million public and private business locations.

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Cortera Supply Chain Index Up, In Line with Seasonal Payment Slowness

Our latest Cortera Supply Chain Index (SCI) numbers are in and jumped by 13% over the prior month. While this might seem like a big jump, this typical for this time of year as we head into the holiday season and businesses tend to slow payments to help finance their expanded inventory. Still, since the beginning of 2010 the Cortera SCI has trended back down to levels last seen in early 2008.

As we look back on the Cortera SCI over the last few years it correlates nicely with both the ISM’s Purchasing Managers Index and NACM’s Credit Managers Index—as both indices started contracting in late 2008 (below 50 on the scale), US businesses also began to slow their invoice payments to their suppliers. In 2009 and 2010 as both the PMI and CMI began to improve and show economic expansion, the SCI also began to improve as businesses became more confident in future sales and made more timely payments to their suppliers.

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Latest Supply Chain Index Steady at Lowest Levels in Over Two Years

The June 2010 Cortera Supply Chain Index (SCI) remains in record low territory dropping to 6.79 days beyond terms (DBT), its second lowest level since the index was started in January 2007 and the third consecutive month below 7 days—all good news. The lower the SCI the better as business confidence rises and businesses pay their suppliers in a timely manner. The SCI measures the payment activities of approximately 300,000 businesses covering manufacturers, distributors & wholesalers, retailers, services, and transportation companies.

The June 2010 ISM Manufacturing Report on Business also showed healthy numbers with the eleventh consecutive month of expansion in manufacturing activity. However, it’s not all positive news as the ISM index dropped from 59.7 in May to 56.2 in June. Readings above 50 indicate an expansion; below 50, a contraction. One area to watch is the new orders component of the ISM index – it dropped from 58.5 to 65.7. While still in expansion territory this could indicate a more moderate pace in the second half of 2010. The Commerce Department also reported today that demand for durable goods dropped 1 percent in June—another sign that the recovery may be losing steam. We’ll be watching the SCI closely for any signs of weakness.

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Small Business Index Hits Best Levels Since 2007

As we do each month, today, we published our latest report of small business payment activities (see chart below). After watching as the gap grew between the payment habits of large and small businesses throughout the worst periods of the recession, both indices have now converged into a tighter pattern. The SBI peaked out in December 2008 at 12.66 days beyond terms and now stands at 7.02 days – the lowest level since we created the index back in August of 2007. This kind of improvement in paying behavior is typically a sign of confidence, as owners and managers feel more comfortable with the expectation of replenishing cash as new business comes in the door. The latest survey results from the NFIB also support a more confident outlook. In May, the NFIB Small-Business Optimism Index recorded another advance, rising 1.6 points to 92.2. The largest index component improvements were found in expectations of economic conditions (+8 points) and plan to increase inventories (+4 points).

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Consumer, Business Delinquency Data Reveal Mixed View on Recovery, Stress

Earlier this week, CNBC (via Reuters) published what looks to be great news when it comes to embattled consumers: Major credit card companies were reporting an improvement in delinquent payments. Simply put, their clients (aka The consumer), were suddenly paying their bills at a faster clip. And while reasons other than improved personal finances were floated (like the use of year-end bonuses to pay down debt), most reporters covering the story – and the companies reporting the good news – suggested this was indeed a sign of the long awaited consumer rebound.

Fast forward to today and Cortera’s related business view of debt and delinquencies – our Past Due by State Report – and the picture looks a little less rosy. Unless of course, you’re a business owner in Nevada.

According to our just published data, businesses in the top-ten most delinquent states look to be trending in the wrong direction, revealing a less than uniform impact of the supposedly improving economy. In fact, 9 of the top 10 most delinquent states showed delinquencies actually getting worse.

One of the nice exceptions is Nevada, far too long a poster child for delinquent businesses. As it turns out, Nevada businesses improved to the point that the state no longer makes the dubious top ten list. And that welcome surprise might be as much a sign of impending recovery as consumers suddenly finding the cash to pay down their personal debts.

So how is the recovery impacting debt, delinquencies and deadbeats in your neck of the woods? Is cash suddenly flowing quicker or is the stress still front and center? We’d love to hear from you.

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Credit by association: Chamber members offer safest bets when it comes to commercial credit

Visit your local chamber of commerce website and you are bound to see list of reasons to join – the benefits of membership. Among the most common cited: networking, advocacy and public policy, awareness and marketing, and of course, local credibility. And now we can add another to the list – one uniquely relevant to small businesses in today’s economic landscape: Attracting credit.

According to a Cortera study produced for the American Chamber of Commerce Executives (ACCE), chamber members consistently received better credit scores than other businesses in their region, their states, and across the country as a whole. The study covers 10 regional chambers to ensure both geographic and economic diversity. To a chamber, member businesses scored well above 600, compared to the national average of 557, even in hard hit states like Oregon and Florida.

When we asked the respective chamber execs why such a favorable discrepancy exists, some suggested it matched with the responsible corporate citizen profile of the average chamber member. Others pointed to a great sense of partnership and local commerce responsibility – local businesses helping each other out by paying their bills more rapidly and ensuring fluid cash flow for all. Still others pointed to the types of programs chambers put in place to ensure members were always up to speed on the best finance, accounting and credit practices. Whatever the answer, one thing is clear: When comes to credit in this era of risk adverse lenders and trading partners, chamber members enjoy a distinct competitive advantage.

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Oregon businesses: “The check is in the mail”

Good news, Nevada. You’re no longer the poster child for delinquent payments. While it’s a bit too soon to be popping the champagne – Nevada still ranks #1 in percentage of accounts 90+ days beyond term – Oregon businesses now own the dubious distinction of leading the nation in late payments. According to our latest Past Due by State report unveiled this morning, more than 20 percent of Oregon-based business accounts receivable are past due, the highest percentage of any of the 50 states. Alaska, in contrast, continues to enjoy the lowest percent of past due accounts, with just over 6 percent past due. The national average is hovering in a familiar range of just over 16 percent, which has been the norm over the past year.

Joining Oregon on the less-than-favorable top 10 list are Wisconsin (20.46 percent past due), New Mexico (19.79), Florida (19.72), Minnesota (19.64), Nevada (19.55), Michigan (19.15), New York (18.30), and Hawaii (18.05).

 Business Accounts Receivable Debt Past Due by State - December 2009

As the saying goes, “if I don’t get paid, you don’t get paid.” Timely payments are critical to ensuring fluid cash flow and therefore optimizing working capital. Unlike the larger credit story, where business owners can quickly point to banks and other lenders for their woes, we’re all in this one together. And at the risk of over simplifying, we all control our own interdependent destinies. Pick your suppliers, partners and even clients carefully, and make sure you take the time to assess and reassess risk when it comes to the payment behavior of those directly responsible for your cash flow. Or adopt a strategy of doing business exclusively with Alaskan companies.

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