US vs. Non-US Credit Reports

Submitted by Anonymous on Sun, 12/21/2008 - 14:23

Articles

Historical Perspective

In the early 1800’s, the great majority of goods the US required were either produced in factories in the East or imported through the East coast ports; therefore goods could be manufactured or imported, delivered for sale/use and collected for easily, given the relatively small geographic area being served.

This would soon change.

Explosive population expansion from the east coast of the US through the Mid-West to what now is California required that goods also be shipped from the East Coast to serve those burgeoning populations. This made immediate payment difficult, if not impossible and the infant banking system could not easily support transactions across such distances.

In order to conduct trade with the fledgling companies in the Mid-West and West, businessmen became more reliant on credit information developed by a few firms like R.G. Dun & Company in New York and John M. Bradstreet, Co. in Cincinnati, OH.

These credit companies utilized correspondents to collect information on the companies seeking credit. Usually, local lawyers with a debt collection practice served as correspondents and thus had the ability to evaluate payment habits. Other information that was collected consisted of “Their means, capital and character, the length of their residence in their present locations and their general mode of business as to cash or credit”.

Since there were few governmental requirements (indeed, in some places, there was hardly any government at all), in opening and running a business in the “Wild West”, little “official” reporting existed. So, out of necessity, the tradition of extending trade credit utilizing this kind of information was born.

Specific Differences

Content	US C3 Report	Non-US	Comments
Financial Detail	10%	Varied	In the US, only Public companies are required to supply financial detail to a government authority (Securities and Exchange Commission – SEC). The decision to release any financial information is completely up to the subject of the investigation resulting in a 10% success rate when collecting this data. When present, it is important to note the source of the financials (audited, un-audited, book statements, estimates) in order to evaluate the integrity of the data that should influence the ultimate decision.
Payment Data	YES	NO	When evaluating the risk associated with a company, payment information is extremely important because the information is gathered form objective 3^rd party suppliers to the subject of the investigation. In the absence of financial information, this data can be viewed as a proxy for financial detail. So, if payments are slow, you may deduce that cash flow is limited. This is why these payments are analyzed in regard to seasonality, type of supplier, and size of high credit.
Patriot Act	YES	NO	The Patriot Act requires that all US companies check their customers against government maintained lists. These lists are made up of companies and individuals that are excluded from doing business with any US company. The lists are: · Denied Party List · Unverified List · Entity List · Specially Designated National · Debarred List This is sometimes used outside the US for similar purposes.
Property Ownership	YES	NO	This information can be valuable in the following way. If the property is owned by the business owner or the business, it is an indicator of stability.
Content	US CRIBIS	Italy	Comments
UCC-Uniform Commercial Code Filings	YES	NO	The inclusion of this information allows a creditor to evaluate how much and which of the company’s assets are pledged to another creditor, thus not available in the case of liquidation.
News	YES	NO	An important source of information on companies is the “current awareness” information contained in trade publications, newspapers, press releases and the like. No other provider includes this information as a normal part of the report.

US vs. Non-US Credit Reports

Navigation