The economic ride continues to be rocky, which means that two steps forward and one step back is going to be the norm for a while. Sometimes it’s going to be one step forward and two steps back.

We’ve covered credit before. The market is telling us it’s time to cover it again.

After a bit of easing, credit for energy providers has tightened up again, perhaps tighter than at any previous point. No one wants to take any risks with anyone, and no one is getting cut any breaks. We’re seeing conditions and demands we haven’t seen before.

In the current market, with energy prices so favorable and substantial savings to be had, this is leading to some heartbreak.

We can’t stress this enough: maximum savings come to those who are ready to sign a contract NOW. That means having your credit in shape for quick approval. These days, that means six-pack-abs shape. An offer may be valid for just a day, or even just a few hours, and if credit holds things up it can mean offers withdrawn, contracts refused, or hefty upfront deposits demanded. Increasingly, we’re finding that customers who have let their credit get flabby aren’t even getting offers.

And boy, this is not a market you want to miss.

Are you ready to act? Are you ready to save? What follows are the seven deadly sins of credit…the farther down the list, the worse the sin. Do you see yourself anywhere on this list?

#7: No Dunn & Bradstreet listing
This is the first place they look. If you’re not here, you’re nowhere.

#6: An incorrect Dunn & Bradsteet listing
You’ve got a D&B? Great. Have you checked it lately? Is the description correct, as well as the address and contact information? These little details have grounds more than a few contracts to a dead stop.

#5: Multiple company names
If your name changes, if partners change, if business focus changes or the business expands, the company legal records need to updated accordingly. Otherwise, creditors see multiple DBA’s (Doing Business As) on your D&B. This does not make them happy. Record updating is one of those “we’ll get around to it someday” things…get around to it. By the way, federal and state tax laws require it, as well.

#4: Too many credit checks
No matter how good your credit score, each time a potential new creditor takes a look, it’s listed on your credit report. If the report shows more than 3 or 4 of those checks in a 30 day period, that raises red flags.

#3: Too many credit accounts.
AIG had lots of irons in the fire, way beyond their ability to pay. AIG was fine. AIG was king. Then AIG nearly brought down the world’s economy. Too many credit accounts is a VERY bad idea right now. Doesn’t matter that your history is rock solid, or that you don’t use the majority of them. If the potential is there to overstretch your budget, providers are going to be nervous about you.

#2: Too few active credit accounts
On the other had, you need a good payment history with a decent number of accounts. A lack of information here can make providers think your business is not as successful as it should be. Problem!

#1 Paying your bills late
This is the biggee. Even one day late is marked on your report as a late-pay. Some energy providers insist upon 6-12 months of “clean ” bills…that is, no late payments…before they will offer a contract. Oh, and right now, on time means you need to pay before the due date. Yes, things are that tight.

Did you come through clean? If not, Cost Containment Intl. can advise you on ways to get your credit out of purgatory. Give us a call.

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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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