AI-driven insights for eCommerce success: Understanding your business credit score

AI-Driven Insights for eCommerce Success: Understanding Your Business Credit Score

The Federal Reserve 2023 Small Business Credit Survey reports on the current state of business lending:

  • 93% of small businesses reported experiencing financial challenges in 2023. The most common challenge was the rising cost of goods, services, and labor.
  • 51% of businesses were fully approved for financing, based on the original request in the loan application.
  • Business satisfaction with lenders declined, and high interest rates was the biggest complaint.

Many eCommerce businesses need to obtain financing as they scale and grow, and their credit rating has a large impact on the company’s ability to borrow.

Brightflow AI offers a proprietary Business Credit Score that reveals data about overall business health. The score details how fast your business is growing, how strong your balance sheet is, and how sustainable and profitable your business is in the eyes of lenders.

Why your credit score is important

Companies, particularly small firms, may have limited access to capital and one option is to apply for a business loan. As an example, businesses may apply for a line of credit to finance short-term cash needs, such as inventory purchases.

Potential lenders use the business credit score to determine if a borrower will repay all interest and principal payments on time. The score considers your past use of credit, and if the business repaid the debt on time and in full.

Firms with a higher credit score are offered more attractive loan terms and lower interest rates.

How is the credit score determined

Lenders rely on Dun & Bradstreet, Experian, Equifax, and other businesses to calculate credit scores.  Each of these credit bureaus uses a slightly different scoring model. For example, Dun & Bradstreet scores range from 0 to 100, and 80 is considered to be low risk.

The credit score assesses the risk that the borrower will make a late payment, face financial stress, or go bankrupt within 12 months. Lenders consider the size of the business, the industry, and the credit history. A firm that operates in an industry with high profit margins is in a better position to repay a loan.

The Brightflow AI Business Credit Score is broken down into three main categories:
  • Embedded value, which focuses on how fast your business is growing and how profitable it is
  • Liquidity, which measures the strength of your balance sheet and borrowing capacity
  • Ability to scale, which focuses on future growth, cash generation and sustainability
The overall score is determined by the total of each of these categories, and ranges between 0 to 100. A total score above 70 is considered excellent; between 60-70 is considered good; between 25-60 is considered fair; and below 25 is considered poor. Brightflow AI’s team of experts can provide detailed feedback and advice on how to improve your business credit score and overall business health.

How to improve your business credit score

Owners can improve the business credit score by creating a strong history of credit use and repayments:

  • Understand credit card agreements: Business credit card terms and conditions can be confusing and some businesses make late payments based on incorrect data. Read the card agreement carefully and contact the card issuer to get clarity on payment due dates, interest rates, fees, and penalties.
  • Payments: Pay bills on time, or before the due date. Pay close attention to due dates and submit payments before the last minute.
  • Notifications: You credit score improves when vendors, suppliers, and lenders are paid on time. Check your credit score periodically to verify that payments are reported to the credit bureaus.
  • Supplier relationships: Find reliable suppliers that provide quality products at a reasonable price. Work to consistently pay suppliers on time. When you maintain strong relationships with suppliers, they are more likely to report your timely payments to credit bureaus.

Work with the eCommerce experts

Brightflow AI provides a number of important services for eCommerce firms. Customers can address a number of tasks using Brightflow AI and avoid using multiple software products. In addition to the proprietary Business Credit Score, you can access these services:

  • Cash management: Track multi-channel financial data quickly and easily, so you can make better more profitable decisions. Monitor cash inflows and outflows, and generate daily, weekly, or monthly reports.
  • Access to capital: Get access to growth capital, investment advising, partnership connections, and customer solutions to help you grow your business over time. When you improve business creditworthiness, you’re better positioned for future opportunities.

Work with the eCommerce experts to improve and monitor your business credit score at Brighflow AI.

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