Credit extenders must make difficult decisions every day, and these decisions often have an impact on their company’s bottom line.
Selling to companies with predominantly lower Blue Book credit scores may result in losses and cash flow constraints that put pressure on their own ability to pay obligations and foster growth.
There are a few reasons why a company might have a low score, and sometimes it’s as simple as keeping an updated credit profile. With vendors and other credit extenders evaluating Blue Book scores, it’s important for companies to have as complete a credit profile as possible, and this includes a score representative of how they do business.
What’s the real benefit? That ‘simple three-digit value’ markets a company and provides quick insight into whether it will be a good business partner to others.
“We monitor our Blue Book score,” confirms George Agorastos, sales and office manager for importer/exporter Arizona Sky Produce, Inc. BB #:269689 in Nogales, AZ. “It shows how responsible we are with our business—we want it as high as possible to make sure no doors are closed.”
Brooks Lisenbey of Pack Right, LLC BB #:206969, a distributor in Nogales, AZ, affirms, “When dealing with a new vendor, the Blue Book score is a tool a supplier can use to evaluate our ability. After a period of time, they know the truth about us.”
Yudi Persaud, president of S.K. Cornerstone Group Inc. BB #:209965, a trucking and transportation broker based in Kingsville, ON, says the company always strives for a good Blue Book score. “It helps attract carriers and customers,” he notes. “It provides confidence and they know they’ll get paid.”
So, a good score is good marketing!
Aside from survey results, Blue Book receives dozens of inquiries a month from customers asking about scores. Some want to know how to get one, others want to know why their company’s score changed, and if it went down, how they can improve it.
The answers are always closely tied to data and sharing information. Here are a few tips to build and maintain a good Blue Book score.
First, be sure to keep reference lists of vendors and other service providers current. This allows Blue Book to connect with the businesses a company deals with most frequently, since they’ll have the best insight on current pay performance.
Next, we suggest paying within terms and being as consistent as possible in payments to vendors and other service providers.
In some cases, a company might not be able to pay all trading partners due to a cash flow pinch or a dispute over a transaction. But in most cases, if these hiccups are limited, they shouldn’t have a significant impact if there’s a current list of references on file and data is abundant.
In paying close attention to their Blue Book score, most companies will avoid pitfalls—like being unable to secure the product they want, establish new customer relationships, or projecting a positive, stable image.
So, bottom line: keep Blue Book informed by submitting current reference lists, complete trade experience surveys when received, and confidentially share A/R aging files. Doing all three will benefit you, your trading partners, and the industry.
This is an excerpt from the Credit and Finance department from the Novembe/December issue of Produce Blueprints magazine. To read the whole issue, click here: https://www.producebluebook.com/#november-2024-produce-blueprints-magazine/1/
