Xero teams with Equifax to provide credit reports
Levelling the playing field for small business owners.
Accounting software provider Xero has partnered with Australian credit bureau Equifax to help bridge the knowledge gap between small and big business, piloting a new credit risk indicator feature which could help mitigate some of the risks around being paid on time and maintaining a healthy cash flow.
These credit indicator reports allow small business owners to identify the credit risks associated with current and potential business partners such as suppliers, investors or clients.
By punching in a business' name, street address, postcode, location or ABN, Xero pre-populates the contact information and provides an overview of the company's credit risk. If a business owner wishes to learn more about a contact's risk assessment, they can purchase a SwiftCheck from Equifax.
Xero admits it does not exclusively hold this information or share information back with Equifax but are simply providing businesses easier access to Equifax's credit payment scores.
Australian banks and other big organisations already utilise credit reports, and in the US and other global markets, credit scores are frequently used to help assess both personal and business credit risk.
Xero has some tips on how small business owners can reduce their risk if a client or supplier returns a high credit risk rating. For example, it may be beneficial to request a deposit from a client or agree to a cash settlement upon delivery. This may help to minimise the chance of debt as a result of late payments.
While some business owners may feel uncomfortable having their credit risk indicator made available to other users, Xero insists initial access will be limited to a small pilot group, with feedback and criticism regularly monitored in order to make necessary improvements.
Despite a slight decline from previous quarterly results, the latest Westpac-Melbourne Institute SME Index, analysing today's economic landscape, reveals Australian small business confidence remains high.