Without question, financial service providers need access to the most comprehensive information possible when working with business customers. This is important since most U.S. businesses are small to mid-sized firms, some of which have little to no business credit profile, and many simply won’t survive beyond five years. Additional data can help you understand their financial profile to assist in evaluating immediate or long-term credit risks associated with their business.
Yet, accessing and using multiple sources of data to make financial decisions about a business customer requires responsibility. Enter: the Equifax Commercial Financial Network (CFN), a powerful, multi-source contributory database program with strict data governance and protections created specifically for commercial financial service providers.
Make better lending decisions, serve more businesses
The CFN helps organizations that extend credit, better understand their business customers including smaller companies that sometimes lack traditional credit, so they can confidently serve a much wider audience of business customers, large and small. Through CFN membership, financial providers gain access to a variety of business financial data and related products, as well as exclusive account payment data that’s only shared among CFN members. It’s why most members join. But, they also get peace of mind knowing that all data aggregated and leveraged within the CFN is expertly managed to ensure the strongest compliance and data protection.
Strict data governance is critical in business finance
When working with big data sets from multiple sources that are being used for different purposes by different program members, things can get complicated—fast. Having a documented data governance policy in place is your best bet for optimizing data consistency, quality, accuracy and usage. Knowing this, the CFN employs a robust data governance program covering the following key program factors.
- Participant eligibility
To help its members make sound and more informed credit and risk origination decisions, CFN membership is open to any business that meets the proper criteria. This helps optimize the relevance and power of the data, among other things. Specifically, participation in the CFN is open to any company that: 1) extends credit to another business, whether that credit is accounts receivable or a loan/lease; 2) owns the debt or obligation related to a business financial obligation; and/or 3) sends statements, or invoices and then receives the payment on those obligations.
- Data contribution and reciprocity
The CFN is a contributory database program. That means that in order to receive information relating to your customer based on their history with other companies, in most cases, you must contribute their payment history with your business. In short, the program’s strength is based on member participation.
As an important part of the program to ensure timely information, CFN members, who are capable of contributing and have relevant data to contribute, do so in a timely manner. Contribution is easy and the CFN allows new participants to access program data for a defined period of time while they’re setting up their data contribution process. This sets consistent expectations for participation among new and existing members, and provides clarity around data expansion efforts.
- Permissible uses
Much of the data contributed by CFN members includes credit-related data. As part of the CFN data governance program, Equifax monitors the products and services based on contributed data to confirm they are used only for the approved permissible uses outlined in the program. Those permissible uses include risk mitigation activities such as deciding if you should extend credit to a new customer, monitoring the credit health of an existing customer, fraud detection, risk policy development and management and more. In addition, CFN data can be leveraged to review the reliability of your vendors and contractors. CFN policies specifically prohibit use in marketing activities.
- Innovation and compliance
Knowing that businesses, markets and regulations are constantly evolving, innovation is also part of CFN governance. For example, all existing and future products offered through the CFN follow a New Product Innovation (NPI) process, a structured approach for developing new CFN products. It involves industry best practices as well as a standard, gated, product-development process used to efficiently and effectively develop high-quality products that meet customer needs.
Grow your commercial portfolio with confidence
To securely grow your commercial customer base and expand your financial service offerings to more businesses, you need access to more detailed data. You can get all that through the CFN, including expanded financial coverage of many smaller firms that may lack traditional credit. But, it’s also essential to know that the data you share and access through the CFN is being managed and used appropriately. The robust CFN data governance program gives you that assurance by providing well-defined guidelines around data usage and complete transparency on compliance with those guidelines. In the end, you get the expanded data you need to grow your business, and you can rest easy about it.
To learn more about the CFN, please visit http://www.equifax.com/business/commercial-financial-network.
At Equifax, our goal is to help grow your business and optimize the value of your customer relationships by giving you a wider view of your customers across the account lifecycle. For more information about the many ways we can help your business, please visit: http://www.equifax.com/business/business-services.