Most Canadians are aware that consumer credit reports help determine how much they can borrow. Business people need to be even more familiar with commercial credit reports, which are financial tools that lenders use to evaluate the eligibility of their companies for business credit.

Recently, Equifax Canada launched a redesigned business credit report that enables executives to decide in seconds whether or not to extend credit to commercial enterprises. Both English and French versions of the report are available.

"Any time you're granting credit to a small, medium or large-size business, it's in your best interest to know everything you can about that business and about the risks you may be facing so you know if and how fast you're going to get paid," explains Equifax product manager Nicole Brennan.

An overview of the new report
Equifax's refreshed layout spotlights critical financial signals on page one of each report. At-a-glance information includes bankruptcy alerts, bank investigation reports, credit inquiries and delinquent account summaries. Instead of having to read through the entire report, Equifax customers can go directly to reasons why they should say no or yes to credit requests.

The business credit report also features two key warning signals. The Commercial Delinquency Score (CDS) represents the probability that a business won't pay within 90 days, while the Business Failure Risk Score (BFRS) shows the likelihood that the firm will permanently close its doors over the next twelve months.

Both metrics can be customized to more precisely quantify chances that a company will fail to pay its debts or go out of business. Clearly, a one-in-10 probability of 90-day payment delinquency is a much more specific decision factor than the standard report's 1 to 5 risk-level classification.

When additional research is needed, the upfront alerts link instantly to more detailed report information sourced from over two million business records in Equifax's commercial risk database.

Getting to know your customers better
‘Trade styles' on the new business credit report list the different company names under which a business operates. No matter which of these related names you search on in the Equifax database, each query retrieves the same report. Lenders can check whether the different ‘trade style' names specified on the Equifax report are mentioned on credit applications, and if not, investigate why the applicant omitted that information.

Equifax's new business credit report also specifies Standard Industrial Classification (SIC) and North American Industry Classification System (NAICS) codes with descriptions that help pinpoint the exact industry in which the company operates. Consider how SIC code "5812 Retail-Eating Places" and NAICS code "722110 Full Service Restaurants" incisively describe what the underlying business does.

In addition, the top-down report design enables readers to drill down to details such as a company's returned cheques, collections, lawsuits and other potentially negative activity.

Audience members can quickly learn about a firm's past history by scanning report section summaries using built-in navigation tools and hyperlinks. Charts focus on company-specific trouble spots and enable readers to visualize immediate and long-term financial risks; tables showcase more detailed insights about a business's payment habits and financial obligations.

Breaking new business credit ground
To order the new Equifax business credit report, you must have an Equifax company account and pay via credit card. CreditCards.ca found that the pre-tax price for each business credit report is well under $100; volume discounts are available.

Unlike other Equifax monitoring tools, the biggest constraint of the business credit report is that it provides a snapshot of a company's financial health at a fixed point in time. To keep up with the constantly changing commercial credit landscape, lenders have to order current versions of reports -- especially when client companies request additional credit.

Business credit is more volatile than personal credit, principally because the granting of commercial credit is driven by ever-changing market conditions. This is even more reason why Canadian decision makers need tools like the Equifax business credit report to nimbly and accurately evaluate rapid-fire developments at the company level.

Final grade for the report: "A" for readability and usability. If the new report catches on, Canadian businesses from a wide range of industries beyond retail and financial lending can apply the new report to speedily assess the financial credibility of potential customers, suppliers, partnering enterprises and even venture capitalist financing groups.

See related: How to obtain, correct and monitor your free credit report