2954786781_c1f8166bf7_zPurchasing a one-time product or service from a business requires a certain degree of risk evaluation– is this the best price for this product on the market?  Is the quality of this service worth my time?

There are a thousand factors that can contribute to a consumer’s decision to buy; anything from the knowledge and ability of a customer service representative to the user-friendliness of an online store can affect whether or not a sale happens.  For most consumers, these decisions often happen quickly, and the result of the consumer’s decision is immediate, but how can you determine whether a company will deliver in the long-term, or after three months, six months, or a year?

Most, businesses shopping for contracted suppliers, for example, need a way to determine whether or not they can trust the supplier to deliver on its promises on a consistent, continual basis.  One way companies can determine this is by evaluating a supplier’s SER Rating, or Supplier Evaluation Risk rating.  The SER Rating is contained in a company’s D&B® business credit profile and helps predict whether or not a company will still be in business 12 months from now; a 1 indicates a low risk of business failure and a 9 indicates an extremely high risk of failure.

Some of the key factors that help determine a company’s SER Rating can include:

Payment Behavior

  • Number of payment experiences
  • Payment experiences past due (31-60 days and 61-90 days)
  • Negative payment experiences
  • Trending Payment Details

Demographics

  • Company type (i.e., corporation)
  • Ownership of facility
  • Total number of employees, SIC, and State
  • Years since last management change
  • Age of the business

Public Records

  • Number and dollar amount of suits, liens, judgments, bankruptcies
  • Total number of UCC filings

Financials

  • Age and existence of balance sheets
  • Net worth indicator
  • Return on assets
  • Total liabilities to net worth ratios

Though it can be tempting to write off the notion of a rating that can predict your business’s future, a bad SER Rating can potentially affect your business.  There is no hard-and-fast rule about the highest SER score all companies are willing to accept from a supplier before entering into business with them, but anything above a 6 may disqualify you from eligibility for a supplier program.

If you’re a supplier company, check your D&B report to ensure that all information is accurate and complete and be aware of your SER Rating as you seek new business opportunities.

Do you know your company’s SER Rating? We have products like CreditMonitor that will give you this information or you can get an overview of your company’s SER Rating through our FREE CreditSignal product*.

Looking to get into supplier programs? Our Supplier Connect product is designed to help ensure your business maintains the minimum scores and ratings to remain eligible for many supplier programs, increase your business’s visibility online, grants access to educational material and guides on the application and bidding process, and more! For more information about Supplier Connect, call 1-855-456-8684.

Photo credit: renaissancechambara, Flickr