“Creditors have better memories than debtors.” So said Benjamin Franklin in 1758 in Poor Richard’s Almanack. It is as true today as it was then.
The ability to access credit is a company’s lifeline. Just as crops need proper care to grow, so does a company’s credit profile, through proper business management and discipline. Those who extend credit and evaluate risk look to a company’s credit profile to assess its creditworthiness, stability, and viability.
Not knowing how creditors view your business can be a costly mistake. Poor credit ratings, scores, and/or an improperly managed credit profile can cost thousands or even millions of dollars over the lifetime of a business, either by limited access to financing, less than optimal terms, vendor/customer restrictions, and missed opportunities.
A Dun & Bradstreet article by Amber Colley notes, “Nearly half of all business owners don’t realize they have a business credit score, and of those who do, over three quarters don’t know how to interpret them.”
A complete credit profile, good credit rating, and score are vital and can dictate a company’s growth, even survival.
Rating Agencies
Any company that establishes a bank account or applies for a corporate credit card has a business credit profile and some sort of rating or score depicting risk. Dun & Bradstreet and the “Big 3” credit bureaus—Equifax, Experian, and Trans Union—have proprietary methods for generating such profiles and risk assessments.
Unlike the aforementioned business rating bureaus, Blue Book Services’ proprietary ratings and scoring system are designed exclusively for the fresh produce industry.
John Harris, president of Paradigm Fresh, Inc. BB #:295982 of Fort Morgan, CO, calls Blue Book Services “the produce bible” and finds the other credit rating agencies of little value when it comes to serving the produce industry.
John Russell, president of J.E. Russell Produce Ltd., BB #:115731 in Toronto, ON, agrees. “Blue Book Services is the go-to for our industry. Produce turns over very quickly—same day, next day, two days—so does the money. Having a good reputation among the grower supply chain is very important,” Russell stresses, “it gives you a leg up to get the product you want from the people you want to buy from.”
There are other agencies as well, and while Blue Book Services is designed to help produce businesses and those that operate within the confines of the industry, rating agencies do have one thing in common—all are data driven. Data builds credit profiles and results in how companies are rated and scored.
This is a multi-part Credit and Finance feature adapted from the October 2019 issue of Produce Blueprints.
