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A pilot with Equifax gives small biz access to big business tools in AU and NZ – credit indicator reports

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As any small business owner knows, getting paid on time and maintaining a healthy cash flow are key for the survival of a business. According to a recent survey*, 62% of small businesses don’t think they could survive the next three months if their invoices owing were left unpaid.

Knowing who you’re getting into business with can help mitigate some of the risk around not being paid.

Equifax reports giving small businesses a leg up

Announced at Xerocon South last year, we’ve teamed up with Equifax (formerly Veda) to pilot a feature that gives small businesses in New Zealand and Australia access to tools long used by lenders and big businesses to help them make better lending decisions. Previously only available from separate credit checking services, we’re now partnering with Equifax to let small businesses on Xero see what big companies have always had easier access to. Banks and other big organisations already use credit reports to check on the credit risk of their potential customers, suppliers and partners.

Ultimately the credit risk indicator protects small businesses many of who work on tight cash flow, to check they are using suppliers and partners who have good credit indicators.

 

Equifax and Xero helping small businesses to avoid credit risk

Credit risk was an issue recently faced by a cabinetry business in Perth. One of Xero’s accounting partners recalls a construction business client that lost $151k on a job. The small business was contracted to do $151,000 worth of work for a client in the construction industry — a large job by any means. They completed the work on time and invoiced the client, as per normal procedures.

However, after months spent chasing the client to pay their invoice, the business owner received a call with bad news. The construction client had gone into liquidation. The business had been trading while insolvent, withdrawing money from the business and moving it to other bank accounts. If the cabinetry business had the tools to do a business credit check, they may have reconsidered or changed the payment terms to be paid upfront.

Making the credit risk indicator a positive experience

While we think this is an innovative and bold feature, and truly believe small businesses will be better off knowing the credit risk of the people they do business with, we also realise it may make some business owners uncomfortable about having their credit risk indicator available to other Xero users. Initially this credit risk indicator will only be available to a small pilot group. We’ll monitor the feedback carefully so it’s a positive experience.

Credit scores are the norm in the US and other markets where they are widely used to help assess both personal and business credit risk. Together with Equifax we’re providing more information to help small businesses make better decisions when dealing with their own customers. We believe it will have a good impact on small business, but if there is any indicator report disputed, there is a clear path to raise it.

Simple things small businesses can do to ensure they get paid

If a client or supplier happens to show a high credit risk indicator there are a few simple things small businesses can do to ensure they are paid. Things like asking for a deposit, or cash on delivery for potential customers that may be a risk of not paying their invoices or loans. This will help save businesses from having to write off bad debts or chase down late payers that will ultimately affect their cash flow and ability to do business in the long term.

Here is how businesses can check their own credit risk indicator and those they want to do business with

In Xero using their street address, postcode, business name, business location, or ABN/NZBN, Xero pre-populates the contact information to provide a view of their credit risk. And should businesses want to learn more about a business contact’s risk, they can purchase SwiftCheck report from Equifax.

Where businesses want to dispute their credit risk indicator, they should first speak to the provider of the information to have it corrected. If you still think there is a mistake or error, you can contact Equifax to have it reviewed. Learn more for AU and NZ.

Xero does not exclusively hold this information or share information back with Equifax, Xero is simply making it easier for businesses to get access to a business’s credit score.

This pilot is an important step for small businesses to easily access tools which big businesses already use to better understand the people they do business with. Not all users in your org may have access to the feature as it’s currently a pilot release.

Disclaimer: The information contained in this communication is general in nature and does not take into account a business’ objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your business’ circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.

9 comments

Colleen Stromei
May 4, 2017 at 9.43 am

My industry association clients are going to love this. Credit checking new members just got so much easier!

Andrew
May 8, 2017 at 3.17 pm

Yer, but how do you actually do the check. The post is light on detail on “how”.

Thanks

Craig
May 11, 2017 at 5.17 pm

Yes I had to re-read the article a couple of times but there is no how to?

Jo Blundell
May 11, 2017 at 5.34 pm

Hey Andrew, we’re still rolling this feature out to users so you may not have access to it yet. You’ll get a notification in Xero when you receive the feature. When you look up a new contact, you’ll be able to see their credit risk / payment risk indicator automatically.

You can watch a demo video and learn more here:
NZ: https://www.xero.com/nz/equifax/
AU: https://www.xero.com/au/equifax/

Glennis Stuckey
May 11, 2017 at 3.11 pm

How do we turn this on?

Linda
May 11, 2017 at 8.06 pm

Every day I do credit checks for each new client. This takes a good 20 minutes per client. Great time saver. Thanks Xero!

Nina Blathwayt
May 18, 2017 at 3.14 pm

Really excited about this new feature. Let us know when it’s live!

Donna Van Duynhoven
June 14, 2017 at 12.05 pm

I for one thing this is one of those ideas that are good in theory – there is not enough info shown in Xero to make the info usable. Rather it is simply going to make Equinox a huge amount of money for people buying useless reports. For example I just road tested my own business which showed a warning (scary) so i bought the report. I had one credit enquiry over a year ago when I financed a new car (I knew that) and that is all. I am know going to have to carry this report around with me and explain to every client to be careful of using this feature. Might be time to buy shares in the Equifax company current share price USD $140.34 and climbing

Ford
September 15, 2017 at 1.23 am

So now Xero users are going to know what credit risk a business is when they create a sale to their customer. What authorises them to do that? Credit reporting in NZ is unregulated. Insolvency data remains on a credit report for seven years. Which will show as a risk. Credit reporting like debt collection is unregulaed in NZ. Debt can also be loaded on to a credit report more than once by two different entities. And credit reports can be altered by the credit reporter.
Equifax have had two class action lawsuits against them for breaches of privacy and of course there has just been a huge security breach by Equifax. Millions of people were affected and it caused a drop in Xero’s share price. NZ people cannot dispute entries or manipulation of a credit report, I have tried.
Credit reporters do exactly what spammers do, collect data to sell for a profit. Xero makes it easy for the reporters to gain that information.
There is no law anywhere in the world that says creditors much credit check their customers.
The fact that they do is quite simply because we are forced to sign privacy waivers and contracts that contain clauses that allow them to pass data to and from third parties.

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