Thanks to Kathie Bozzone for this week’s article.

Remember the days when a cigar-smoking gas salesman would stroll into your office with a smile on his face and a contract tucked under his arm?

Remember the days when you didn’t have to show that you pay your bills on time in order to get good deals?

Remember them? Well, they’re gone.

Credit has become the Supplier’s mantra. It used to be they didn’t care all that much…funny how a few bankrupcies over “bad debt” issues can change a person’s perspective. Today, your D&B number and associated Credit Risk Rating is the difference between a contract still stuck under your consultant’s arm (nowadays they’ve probably given up the cigars) and a signed contract bringing you a good deal.

I can’t stress enough how important a D&B rating is for your business. For those of you who think that you don’t have a D&B number, guess again. You do. And for those of you who don’t have any idea what your number is, find out. In today’s credit market, it needs to be up to date. And it better be accurate. Yes, it might not be.

Hands up…how many of you knew that “D&B” stands for Dun & Bradstreet?

D&B is the single most important credit risk gauge that Suppliers use to determine if they want to extend an offer or contract to you as a customer. I can’t tell you how many times we’ve found out about the true state of a customer’s credit AFTER the process of obtaining pricing bids has already begun. You can guess what happens next: Suppliers get cagey, good offers are taken off the table, we have to delay the process…it all adds up to good deals missed and substantial savings on energy costs lost.

What affects your D&B? It could be as minor as a few late payments, or as major as accounts that are in arrears 60-90 days.

The effects to you are substantial. Depending on the status of your credit history, you could be required to provide a deposit in order to be acceptable to a Supplier. They’ll hold this money for at least 6 months, and return it to you after 6 consecutive on-time payments. Most of us don’t have a lot of cash we can afford to take out of circulation like that.

Basically:

Good D&B = Low Risk Credit Rating = Saving money with a Supplier immediately.

Did you purchase your site from a previous owner? Have you contacted D&B to confirm your reference number and provide updated financial information? If not, you might be carrying the credit rating of the old owner. Not an ideal scenario. And Suppliers will only issue contracts in the name of the Credit Approved company. So, if you are the new owner and do not have up-to-date information established with D&B, you could be asked to sign a contract with the old owner’s name on it – probably not something you want to do!

Bottom line: do ALL of the following:

1. Contact D&B (their customer service number is 800-234-3867)and make sure that you know what your number is and that the information on file pertains to your Legal Entity name.
2. Make sure that D&B has up-to-date financial information on file for your company.
3. Even in these tough economic times, try to make sure that you have at least 6 consecutive months of on-time payments to your utility accounts.
4. Make sure that when you fill out a credit application that you provide the best possible Bank and Trade references (this are also routinely checked now).

I’ll resist the urge to tell you that you need to eat more vegetables, as well.

Finally, remember that at Cost Containment Intl. we only deal with Suppliers who have a strong bottom line. In order for them to keep that strong bottom line and be able to offer you the savings you are looking for, they can and DO check your credit rating.

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