Veda, it works.
If you are not already aware, Veda, one of the more prominent credit information vendors has partnered with Xero. At a first glance, this partnership may be taken with a grain of salt by small business, however, this partnership is probably one of the more exiting unions that has arisen that I can think of.
You may ask, “Leonard, why is this the case?” The reason is quite simple. Rod Drury discusses the financial web at the core of many of his keynote presentations. And whilst this is usually centric around anything between securing finances for the SME (small to medium business), to the possibility of providing more accurate business benchmarking in the future, one of the most prevalent problems in business today is getting paid, albeit, on time.
One primary issue that constantly faces the SME, is the struggle of the dreaded cash flow. Many businesses know that they have the work in the pipeline, however, they are also apprehensive as to when they are going to be paid. This is an issue that I know keeps many small businesses awake at night, staring into the ceiling from their bed contemplating what will happen if they are not paid this week.
This partnership could potentially change this. By providing a Veda score, and having this information freely available to other suppliers as public information throughout the Xero network, SME’s will be empowered enough to avoid any poor paying clients.
The ramifications of such an innovation are great for the SME. It really gives a bad payer a bad reputation, which is really a godsend, as in the past you would have to do a search on every potential client prior to conducting business in order to determine whether they were a good payer. If you are an SME, there are just too many time constraints to vet every clients credit history.
You may say, Leonard, just because they pay SME’s late, doesn’t mean that they will have a bad credit score, and for the most part you will be correct, however, from my experience, if a business notoriously pay’s late, it is likely that they are behind on other financial liabilities.
Regardless of your sentiments, what we are seeing in 2016, is more than likely to evolve into a more integrated network of enlightened and empowered SME. I for one am looking forward to this with baited breath.