With insolvencies at record highs, choosing the right credit bureau matters more than ever. Here’s what to look for, according to CreditorWatch’s Patrick Coghlan.
CreditorWatch’s Patrick Coghlan is sharing the 11 questions every CFO, credit manager and business owner should ask when selecting a credit reporting bureau.
Here are the 11 essential questions every CFO, credit manager and business owner should ask when selecting a credit reporting bureau, and the answers that reveal whether your provider is truly able to protect your interests.
1. How predictive is the data?
A credit score should forecast future risk, not just summarise past behaviour. Look for a bureau that uses machine learning models built on millions of live tradelines and behavioural data. The most predictive scores incorporate over 30 factors, including payment defaults, director changes, and address movements.
Look for statistical proof. The strongest bureaus validate their models against real-world outcomes. For example:
- One in four businesses with a recent trade payment default will enter external administration within 12 months.
- Entities with a Payment Rating of E have 5x the insolvency risk of those without.
- Businesses with 60+ day arrears are 6x more likely to default.
- Businesses with three or more address changes are 60% more likely to close.
These types of indicators can help you act early, not react late.
2. Is the data proprietary or repackaged?
Ask whether your provider is a reseller of data from other bureaus or not, which can delay or dilute data. Seek a bureau that collects and curates its own data from Australian businesses and has feeds from authoritative sources like ASIC, the ATO, ABR and Australian courts. Proprietary data ensures local relevance, faster updates and deeper insights into SME behaviour.
3. Can the bureau show how its credit ratings are constructed?
A credible bureau will publish how its scoring model is constructed, the segments used and the predictive power of the score. For example, does it include trade-line behavioural data (it should have millions of monthly tradelines), demographic risk modelling (industry, location, entity age) and traditional adverse risk drivers (defaults, court actions, tax debts)? These depth and segmentation features mean the rating system doesn’t just reflect what’s already happened – it gives you a forward-looking gauge of creditworthiness.
4. Does the bureau cover all business types?
Australia’s economy is powered by around 2.5 million small businesses. Ensure your provider tracks sole traders, partnerships, and trusts, not just incorporated companies. Full coverage across all entity types gives you visibility into microbusinesses, which often signal emerging risk earlier than larger firms.
5. How strong is the network effect?
When you lodge a payment default, it should have an impact. In a large network, defaults are visible to thousands of businesses, creating reputational pressure and faster resolutions. In fact, one in five defaults in a well-connected network is resolved within two weeks. That visibility can recover debts and deter late payments.
6. Is the data refreshed daily?
Risk changes fast – your data should too. Look for a bureau that refreshes payment data in near real-time, ideally every few minutes. Integrations with accounting platforms and direct feeds from regulators ensure you’re always working with the most current information.
7. Can the bureau integrate with your accounting and ERP systems?
Manual credit checks are slow and prone to error. Choose a provider that integrates with leading accounting platforms and major ERPs. These integrations allow automated credit applications, real-time monitoring, and alerts triggered by behavioural changes, turning your accounting system into a proactive risk tool.
8. Does the bureau offer automated collections tools?
Credit risk doesn’t stop at the credit check. Late-payments, escalating arrears and invoice accumulation all need active management. A modern credit bureau should offer an automated collections tool, allowing you to connect your accounting software, set up workflows, send reminders, prioritise overdue accounts and escalate into formal collection processes – with minimal manual intervention. This automation frees your team to focus on high-value work, improves collection rates and helps ensure smooth cash flow.
9. What support is available for your team?
Technology is only part of the solution, people matter too. Look for local account managers, onboarding support, and monthly insights tailored to your industry. The best bureaus offer strategic guidance, not just software access, helping you optimise your credit policies and portfolio management.
10. Is there a roadmap for innovation?
Credit risk management is evolving and your bureau should be too. Ask about investment in R&D, AI integration and product development. Leading providers invest tens of millions of dollars annually to enhance predictive scoring, automate collections and deliver hyper-personalised insights. Innovation signals long-term stability and competitive advantage.
11. Why does scale matter so much?
Risk hides in the gaps. Smaller bureaus may miss early warning signs due to limited data. A provider with millions of monitored entities, tens of millions of tradelines and granular geo-risk clustering can detect patterns and outliers before they escalate, giving you the visibility to trade safely.
The bottom line: Ask better questions, get better protection for your business
Choosing a credit bureau isn’t about price, it’s about getting gold-standard protection. Look for proprietary, Australian-owned data, refreshed in real time, validated by predictive accuracy, and powered by a strong, connected network. Add seamless integrations, robust support and a roadmap for innovation, and you’ll find a partner that not only reports risk but helps you manage it. When your bureau sees more, predicts more and connects more, your business can trade with true confidence.
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