Blending Cortera B2B trade credit with LexisNexis® Risk Solutions alternative data enables lenders to make smarter credit decisions that expand their small business portfolios
LexisNexis® Risk Solutions, a data and analytics company, announced that its robust suite of small business credit risk assessment products will soon incorporate trade credit from Cortera, the leading aggregator of business-to-business trade credit. It sources trade credit from more than 40 industries, including manufacturing, medical & lab supplies, food and beverage as well as transportation.
Business-to-business trade credit is a reliable reflection of the financial health of the company-supplier relationship, where spending and payment behavior are indicators of small business creditworthiness.
Upon the news, Jim Swift, CEO, Cortera stated: “When lenders use credit assessment tools that incorporate business-to-business trade credit, many limitations of traditional banking data alone go away. Lenders are able to create stronger analytics, and, in short, with a combined bank credit and trade credit view of customers, banks know more, sooner. That’s powerful.”
Lenders and credit managers will soon have access to small business credit scores, credit reports, risk attributes, and other solutions that incorporate Cortera business-to-business trade credit with LexisNexis Risk Solutions business and consumer alternative data. Additionally, versions of these products will be available for Small Business Financial Exchange Inc. (SBFE®) Members that include SBFE Data™. The combination of these three data sets gives lenders and credit managers more robust predictive insights than other solutions. With the holistic view across small businesses’ bank credit, trade credit, and alternative data profiles, lenders can decision more loan applications, set terms accurately and bank small businesses earlier in their lifecycle.
“Small businesses are vital to the long-term economic growth of our nation,” said Ben Cutler, senior director, Small Business Risk Management, LexisNexis Risk Solutions. “Our small business credit risk products leverage the broadest data to provide lenders with the best information on which to make a decision. Given a large amount of credit is issued between businesses and outside of the typical banking system, we are excited to team with Cortera to provide insights into these important credit relationships. This is important information made even more powerful when combined with our alternative data and SBFE Data. The result is that more small businesses can be included in the financial system without adding unnecessary risks to lender portfolios. ”
“This partnership will be valuable because lending to SMBs is fundamentally different from lending to commercial and industrial companies,” said David O’Connell, senior analyst with financial research and advisory firm Aite Group. “When SMBs get into financial trouble, they tend to treat their bank debt like another trade payable. At both the portfolio and loan levels, lenders should be applying predictive analytics to as much payable related data as they can.”
SBFE approved LexisNexis Risk Solutions as a Certified Vendor in 2015. LexisNexis Risk Solutions tests show that when blending data from various data sets, 60 percent more business profiles are visible on which a lender can make a solid credit decision and a 40 percent improvement in segmentation of applications at lower tranches of the scoring tiers occurs.
Source: LexisNexis Risk Solutions
