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Business Credit Scores 101

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Are you a small business? Do you know your business’s credit score? The range is zero to 100 for most credit reporting agencies, with at least 75 being desirable if you want to be approved for financing and trade credit (business loan or line of credit), says a report at NAV.com and from Gerri Detweiler’s new book, Finance Your Own Business.

1SWhat determines credit score of a business?

  • Size of business
  • Payment history
  • Outstanding debts
  • Credit history length
  • Credit utilization ratio
  • Industry risk
  • Public records (which the credit agencies are always inspecting)

The credit score of your business may be different among the different credit reporting bureaus. The nav.com article summarizes the three most common bureaus below.

Dun & Bradstreet PAYDEX (zero to 100)

  • Based on the total number of payment experiences in D & B’s file, this is a dollar weighted indicator of the company’s payment performance.
  • Vendors and suppliers favor the PAYDEX.

Intelliscore PlusSM from Experian (zero to 100)

  • This credit risk score is statistically based and predicts the likelihood of payment delinquency in the subsequent 12 months.
  • This score incorporates multiple factors and is quite reliable.

FICO® LiquidCredit® Small Business Scoring Service℠ (zero to 300)

  • The SBSS rates applicants by their odds of making payment deadlines.
  • The SBSS score is used for credit line and loan applications (up to 350K from the Small Business Administration).
  • 140 is the minimum score to pass the Small Business Administration’s pre-screen process.

Using Business Credit Scores

  • Lenders want to know how well your company pays debts. They won’t want to lend to you if your credit score is low.
  • When is the last time that you reviewed your business’s financial information? This should be done on a recurring basis.
  • Credit scores fluctuate and are not immune to calculation error. Contact the credit agency if you spot an error or it seems that your score is lower than it should be.

Improving the Credit Score

  • Companies can raise their score by avoiding late payments, among other actions. Improving the score won’t happen overnight.
  • Credit utilization should be about 25 percent.
  • Open several credit accounts.

Robert Siciliano is an identity theft expert to BestIDTheftCompanys.com discussing identity theft prevention.

How Small Businesses Can Evaluate Their Security Risks in the New Year

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Evaluating risk vs. reward is a process most people go through on a daily basis. For example, you are about to make a left-hand turn but a car is coming. You think you can make it but he’s kind of coming fast. The risk, of course, is misjudging his speed and getting into an accident.

At Ready.gov a risk assessment is a process to identify potential hazards and analyze what could happen if a hazard occurs. A business impact analysis (BIA) is the process for determining the potential impacts resulting from the interruption of time sensitive or critical business processes.

A business impact analysis (BIA) predicts the consequences of disruption of a business function and process and gathers information needed to develop recovery strategies. Potential loss scenarios should be identified during a risk assessment. Operations may also be interrupted by the failure of a supplier of goods or services or delayed deliveries. There are many possible scenarios which should be considered.

Risk is a fundamental part of a small business operation. The question is how much attention you pay to each risk and what the reward is for reducing the risk. The cost/benefit key is to effectively recognize risk and reduce it with as little investment as needed.

Define Risk

Be able to define, articulate and be alert to what risks the organization may face in a given year. If any of these risks could cause loss in any way, they need to be addressed far in advance.

Identify Risk

Risk comes in many forms. Create a list of potential threats from your experiences, others’ experiences or from proper risk assessment plans. Threats come from criminal hackers, employees, customers, competitors and more. What’s at risk may include reputations, digitized information, paper documents, physical hardware, and life and limb.

Create a Risk Assessment Chart.

Compile a list of assets (people, facilities, machinery, equipment, raw materials, finished goods, information technology, etc.) in the left column.

For each asset, list hazards that could cause an impact. Since multiple hazards could impact each asset, you will probably need more than one row for each asset. You can group assets together as necessary to reduce the total number of rows, but use a separate row to assess those assets that are highly valued or critical.

For each hazard consider both high probability/low impact scenarios and low probability/high impact scenarios.

As you assess potential impacts, identify any vulnerabilities or weaknesses in the asset that would make it susceptible to loss. These vulnerabilities are opportunities for hazard prevention or risk mitigation. Estimate the probability that the scenarios will occur on a scale of “L” for low, “M” for medium and “H” for high.

Analyze the potential impact of the hazard scenario. Rate impacts “L” for low, “M” for medium and “H” for high.

Information from the business impact analysis should be used to rate the impact on “Operations.”

The “entity” column is used to estimate potential financial, regulatory, contractual, and brand/image/reputation impacts.

The “Overall Hazard Rating” is a two-letter combination of the rating for “probability of occurrence” and the highest rating that impacts people, property, operations,  environment, and entity.

When evaluating risk and determining where funds, energy and attention are allocated to such risks, a risk scoring system can help determine what is a high or low probability vs. what would cost the company irrevocable harm.

The worst thing any organization can do is…nothing. Taking responsibility and using past experience and prediction methods can properly prepare an organization for the inevitable. As they say, if you fail to plan, you plan to fail.

Robert Siciliano, is a personal security expert contributor to Just Ask Gemalto and author of 99 Things You Wish You Knew Before Your Mobile was Hacked! . Disclosures

Small Business Owners: Customer Appreciation Day is July 21

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Do you know your customers? This is a day that happens just once a quarter to put emphasis on getting to know your customers or clients. Shep Hyken, Hall of Fame Speaker – New York Times and Wall Street Journal Bestselling Author is the creator of “Get To Know Your Customers’ Day”, and he’s a funny guy to boot. He’s the only guy I know that actually has a full head of hair but chooses to shave his head bald!

Shep says “This is a simple concept.  Pick up the phone and call a customer you haven’t talked to in a while or don’t know that well.  Take someone to lunch.  Set up a few meetings.  Have a cocktail reception for a few of your customers. Don’t make this one too big or you lose the personal contact and impact you are trying to achieve.”

In terms of business development opportunities, that sounds easy enough.

Your goal to take dedicated time to build a stronger relationship with a few of your customers.

Small Business Tips:

Meet with or call on customers that aren’t already your best customers. These are customers that you would like to raise to the “next level.”  This is customer appreciation day!

Consider doing this more often than just once a quarter.  Why not make a special effort once or twice a month?  How about once a week?

Many of the people I meet say they already do this – on a daily basis.  So, make these days have extra effort that you don’t normally put forth on a daily basis.

*Content expressed in Security For Small Business does not represent the thoughts and opinions of ADT Security Services, Inc. unless explicitly indicated.

15 Screening Tips for Hiring Honest Employees

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Being a small business myself, I know how difficult it is to find the right employees. And everyone I speak to who is in business has the same problem. Unfortunately too many people lie, cheat and steal and when they come to work for you, they drain company resources until they are fired. It’s best to use prescreening services; otherwise the screening tips below will help you to hire honest employees.

#1 Job Classifieds: Place and ad that says what you want: “Seeking HONEST employees with high moral integrity who seek to thrive to in a motivating environment with many opportunities for advancement and higher pay. Applicants will have a background check and psychological test, reference checks, drug testing and additional screening to determine eligibility.”

#2 Look for incongruence. Resume are often “false advertising” and outright lies, look for red-flags and exaggerations.

#3 Appearance is telling. Someone who is disheveled and unkempt is a sign of character.

#4 Ace interviewees: Interviewees who are well-spoken and ace the interview process may have had lots and lots of jobs.

#5 Use employment applications: Check and verify everything.

#6 Resume Red flags: Look for gaps in employment, multiple workers comp claims, incongruence etc.

#7 Employee ID Verification: Photocopy and determine if identification is legitimate.

#8 Background checks: Necessary but are only one small part of the screening process.

#9 Criminal records checks: Insufficient by themselves and do not detect employee theft unless prosecuted and convicted. Juvenile convictions do not show on a criminal records check.

#10 Drug Testing: Drug and alcohol testing is an absolute must.

#11 Reference checks: Follow up and extensively check.

#12 Driving record checks: Look for red-flags, signs of recklessness, carelessness and aggressiveness.

#13 Employee Credit Check: Bad credit means irresponsible.

#14 Physical exams: Unhealthy body means unhealthy mind

#15 Budget check: Request the applicant write out their monthly expenses. If their expenses exceed their income that’s a red-flag.

Robert Siciliano personal and small business security specialist toADT Small Business Security discussingADT Pulse on Fox News. Disclosures

Energy Saving Tips for Small Business

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Going “Green” isn’t a fad, it’s necessary to save the planet. If you have watched any of the documentaries on the Discovery Channel about how the polar icecaps are melting then you might have the same sick feeling in the pit of your stomach like I do.  Conservatively, sea levels will rise around 2 feet in the next 100 years, and that’s just the beginning.

The Small Business Administration and numerous other resources are available to help small business go green.

Whether you own or lease your building, you typically need lighting, heating, air conditioning, power for office equipment, and other services to stay in business. This guide will help your business be more energy efficient.

Become Energy Efficient: Virtually any small business can improve its energy efficiency easily and cost-effectively, using the numerous resources that are available both from ENERGY STAR and a wide variety of other organizations.

Energy Saving Tips: Good energy management is good business. The prudent and conservative use of energy is one of the easiest and most cost effective steps you can take to cut operating costs and increase profitability.

Calculate Energy Savings: Get tools and resources to help you calculate energy savings from your energy efficient upgrades.

Sustainable Business Practices: After making energy efficient upgrades, you may also want to consider taking additional steps to implement sustainable business practices that help protect the environment.

Energy Efficient Upgrades: Learn about energy efficient upgrades you can make to your facilities to lower energy costs and conserve energy.

For Specific Businesses: The types of energy efficiency upgrades that provide the largest cost savings depend on the kind of business you are running.

State and Local Energy Efficiency Programs: Here you will find a listing of state, local and regional programs that help small businesses become energy efficient. These programs offer financial assistance in the form of grants and loans for making energy efficient upgrades.

The clock is ticking. The time is now. Let’s work together to save our planet.

Robert Siciliano personal and small business security specialist toADT Small Business Security discussingADT Pulse on Fox News. Disclosures

Employee ID Verification for Small Business

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When hiring new employees the first concern is often “how good of an employee will they be” but in fact the first concern should be “are they actually who they say they are” because regardless of the nature of your business, an employee who isn’t actually who they say they are can wreak havoc on your business when there are no consequences to their real identity.

Former Department of Homeland Security Chief Chertoff stated; “I’m going to submit to you that in the 21st Century, the most important asset that we have to protect as individuals and as part of our nation is the control of our identity, who we are, how we identify ourselves, whether other people are permitted to masquerade and pretend to be us, and thereby damage our livelihood, damage our assets, damage our reputation, damage our standing in our community.”

We are functioning in an environment in which IDs have yet to be verified or authenticated. There are hundreds of forms of identification in circulation with little security, the Social Security number is a national ID available everywhere, there are thousands of variations of the birth certificate, there are kids on college campuses everywhere selling fake IDs and credit is wide open.

All these fake IDs contribute to the exasperating problem of imposter fraud.

Get the ID Checking Guide to assist you with employee ID verification. “Whether for initial screening or final ID check, verifying ID is important. By reducing inappropriate employment applications, time is saved and later errors or litigation averted. Our references are quick and easy-to-use, with clear indication of the security features that help to verify ID.”

Eventually fake ID detection methods like Smart-cards, biometrics in all its forms, multi-factor authentication and other identity verification methods will help form trusted identities and being an imposter won’t be so easy.

Robert Siciliano personal and small business security specialist toADT Small Business Security discussingADT Pulse on Fox News. Disclosures

Securing Your Small Business Like A Bank

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Banks know security. They have to, because as Willie Sutton once said “that’s where the money is”.

A bank, for example, has multiple layers of security. First, consider the perimeter of the building, which is often designed to include large windows, so that passerby or law enforcement can easily see any problems occurring inside. The bank’s doors have locks. Of course, there is an alarm system, which includes panic buttons, glassbreak detectors, and motion sensors. These are all layers, as are security cameras, bulletproof glass, and armed guards. Ideally, tellers and management should have robbery response training. Many banks use dye packs or even GPS to track stolen cash.

Each of these layers is designed to make it harder for a robber to do his job.

TicoTimes reported “Banco Nacional installed more than 9,000 security cameras in each of its bank and ATMs this week as part of a new satellite surveillance system. The cameras will provide a live video feed from each bank and ATM location and will be watched by a team of security officials stationed in a monitoring center in San José.”

The installation of the video surveillance system was strategically inaugurated prior to the month of December, which traditionally sees some of the highest numbers of thefts in Costa Rica due to the holiday season and distribution of mandatory Christmas bonuses

Think about what current layers of business protection you have in place and how many more layers can be installed that allow for a seamless customer experience and a secure minded culture.

Robert Siciliano personal and small business security specialist toADT Small Business Security discussingADT Pulse on Fox News. Disclosures