In general, I agree with many of the comments/concerns expressed previously in this discussion, however many sureties still use D&B as an initial source for credit information. All sureties recognize that D&B is not always accurate with the information contained in the reports, but as most of you have probably experienced, it leads to additional questions. Ideally, having a D&B report with relatively accurate financial information as well as reasonable Paydex ratings (generally greater than 65) helps minimize those inquiries. Additionally, companies like COFACE, as previously referred to, can screen potential credit risks up front and aid in the collections process. While not without cost, these services can actually benefit contractors when they are negotiating bank lines of credit and borrowing base calculations as many banks with expand lines of credit when they are more comfortable that payment risks are being managed proactively and potentially insured.
Another resource for screening would be surety providers. Sureties will generally want to understand funding arrangements for bonded projects as well as larger unbonded projects to make sure their clients don't end up with non-payment exposures. Contractors should request financial information and or funding commitments from Owners/ Developers and the surety can be an ally in that effort. Further, when screening subcontractors for credit worthiness, contacting the surety to do background checks and requiring bid bonds from unfamiliar subs can serve as added due diligence. This may be standard operating procedures for most of you, but I thought it would be worth commenting. Additionally, subcontractor default coverages are being used more widely by GC's as a way to further protect themselves from sub failure. As such, having very good sub-prequal procedures in place to verify financial solvency is critical to success.
I hope some of my comments were useful.
-------------------------------------------
Robert Kinder
Lockton, Inc.
Lone Tree CO
(303) 865-6419
-------------------------------------------
Original Message:
Sent: 09-10-2012 09:36
From: Ron Heemstra
Subject: Importance of Dunn & Bradstreet Reporting
That's a great question Joe. We've struggled to find a meaningfull process. We've had some success using COFACE (collection agency) help us to some investigation on potential or existing clients. When you use them for collections they will review their records and contacts and share it with you.
Other things we do is I review a list of leads with our Business Development manager and if there are clients we aren't familiar with I'll do some research, mainly on the internet. With privacy rules its hard to get information through banks. However, getting an application type form signed that allows you to contact their bank is another way to get info.
Love to hear what others are doing.
-------------------------------------------
Ron Heemstra Certified Internal Auditor
Controller
Interstates Construction
Sioux Center IA
(712) 722-1662
-------------------------------------------
Original Message:
Sent: 09-05-2012 11:32
From: Joseph Burkett
Subject: Importance of Dunn & Bradstreet Reporting
Over the past several years, we've experienced the same. Incorrect corporate information, I would correct it with them and a year later they call back and it's as if the previous call never took place.
If an organization isn't committed to using it and reporting on all their subs/clients, then it will never work. (and that means up and down the food chain)
The more important question is "what are companies doing to qualify the creditworthiness and business practices of their potential business partners, and what outside services are they emplying, if any."
-------------------------------------------
Joseph Burkett CCIFP
CFO
Cafco Construction Management, Inc.
Boston MA
(617) 426-7600
jburkett@cafcoconstruction.com
-------------------------------------------
Original Message:
Sent: 09-05-2012 09:03
From: Ron Heemstra
Subject: Importance of Dunn & Bradstreet Reporting
I've had similar experiences. I provide basics of what is needed. They are always trying to sell me something and warning me what could happen if I don't. I also get calls from multiple people. I think if they'd get one person assigned to an account and try to establish some type of relationship, they'd be better.
-------------------------------------------
Ron Heemstra Certified Internal Auditor
Controller
Interstates Construction
Sioux Center IA
(712) 722-1662
-------------------------------------------
Original Message:
Sent: 09-04-2012 15:57
From: Stephanie Magenau
Subject: Importance of Dunn & Bradstreet Reporting
I am curious to know if other general contractors report to Dunn & Bradstreet, and if so, to what extent? I only update them on basic information and opt out of giving them information that would cost money to have updated.
It has been my personal experience in the past that the information they get from other sources (especially suppliers) is not accurate. When I've tried to correct the information, it has been time consuming and painful.
For this reason, I am not a fan of Dunn & Bradstreet. However, they have informed me that several companies have ordered a report of our company in recent months, and they are concerned that our incomplete report could be a negative reflection on us.
How do other contractors handle this?
-------------------------------------------
Stephanie Magenau
Accountant
Construction Engineers, Ltd.
Grand Forks ND
(701) 746-0472
-------------------------------------------