Watching Risk, And Reputation, With An Eye On Receivables

What happens when a good credit risk goes bad?  When all the signs you were watching as a small business owner pointed toward a long and happy relationship with a corporate customer, or even supplier – but nothing winds up as it should have?  In short, the relationship sours because that “significant (B2B) other” went sour?

Your cash flow gets hit as the customer cannot pay, or the supplier goes bust, impacting your own interactions with end buyers.

In an age of daily data deluge, the credit score may be a bit misleading, and does not really give an indication of the pressures pushing and pulling at firm from within, and without. One firm, Argos Risk, seeks to find meaning in sources that go beyond the credit score and even the interactions between companies, where phone calls or emails (in other words, formal communications) may not reveal what is going on behind the scenes.

President and CEO Lori Frank told PYMNTS that “a firm can have a great credit score, but this is lagging data, which gives you a payment history and data that is several months old, and as agencies report payment histories,” and what might be troubling trends emerge, it takes months to see a pattern emerge, looking backwards.

For Argos, said the executive, through its AR Surveillance platform, B2B credit risk moves beyond looking backward and looking at recent events updated daily: Moving across social media, county records, phone and email addresses and any number of disparate sources, financial risk is assessed across events that may presage trouble, or a firm in the midst of change that should invite greater scrutiny. Think of management changes (or ousters), location changes, and even changes to telephone numbers – enough of these can add up to signal a business that is in flux, and is becoming, in fact, unstable or transient.

Enough data, continued Frank, comes courtesy of the CFPB, liens, or even social media that SMBs can gain a sense of risk unfolding in real time, across 38 different metrics. In its most recent liaison with business banking, Argos said last week that it has partnered with Platinum Bank, offering AR Surveillance to business customers in what Frank said shows that banks realize that working with firms “is not just about financial management, but about the needs of firms as they are trying to grow revenues.”

Information as power, and as used for even contingency planning purposes, can benefit firms across virtually any vertical, noted Frank (and the firm at present focuses on North America). But by way of example, consider the landlord who rents several thousand square feet to a firm, only to have that firm suddenly fly by night, literally.

There are, of course, uses for AR Surveillance that can cross beyond wariness into more sanguine territory. Frank said that the AR Surveillance allows for geographical, regional and even industry knowledge that can help grow revenues or understand the supply chain a bit more concretely.