As we pointed out in our prior post, The Secret of the B2B Credit Middlemen, the process for establishing, maintaining and granting credit is fundamentally busted. It’s expensive, inaccurate and non-transparent. We believe this industry can be restored in three key ways: 1. Freeing the Data, 2. Socializing the Data and 3. Fixing the Process. In this post we’ll discuss how socializing the data can eliminate one of the key problems in business credit reports: accuracy.
The credit bureaus DON’T ISSUE CREDIT! Businesses grant credit to each other and use bureaus such as Dun and Bradstreet to assess the viability of a given company. A quick glance at the D&B FAQ and you can see to create the credit scores, they use data from multiple sources. Most of these sources include public data or utilities reporting on the timeliness of your payment.
Similarly, businesses make their own decisions about partners, vendors and key relationships. It's the same decision process. Entering into one of these types of business relationship is similar to issuing credit in that you're allocating resources to invest in these relationships.
The bureaus claim to manage over 100 million profiles. The biggest of the bureaus makes 20 million data verification calls per year. Something doesn’t add up! There is NO WAY they can possibly verify the accuracy of 100 Million companies by cold calling. Imagine if they were competing with Waze, verifying traffic and police locations by cold calling drivers on their cell phones. They're a linear tool in an exponential world!
The ratings business information should be SOCIAL. DnB, Experian etc. are data storage middlemen. If companies are able to view and manage profiles, rate other companies and contribute ratings free of charge, then the data will be more accurate, timely and more closely correlated to business reality. Reaching SOCIAL SCALE is the only means to truly achieve this cost effectively.
At Trust Exchange, we aim to create an open, easy to use, peer to peer, risk management platform that enables companies to more effectively manage their risk. The value of the network is proportional to the number of members...we need you!!
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