"Widely accepted projections estimate that, by 2004, B2B e-commerce will represent upwards of $2.5 trillion in transactions. . .Look for a major recasting of how corporate credit is originated and traded." - Diamond Technology Partners

What is Credit?

As its most basic, credit is the likelihood or predictability that someone will pay his or her bills. Every business, in order to survive, must know that its customers (consumers or other businesses) will pay for services rendered in a timely manner. This is so important that most businesses have credit departments whose main purpose is to make decisions about a customer’s ability to pay its bills. But the credit department does more than just crunch numbers and make collection calls. Today’s department is a valuable part of the economy, helping the executive, operations and even the marketing and sales team. Credit personnel can make better decisions with the most credit data, hence, the business is more profitable. An entire industry is comprised of people and organizations whose job it is to provide accurate data to businesses about its customers’ credit history. However, to date, credit data on businesses has been lacking and incomplete.

B2B E-Commerce: A Boom to Credit

The business credit market is undergoing a revolution, thanks to the Internet and the B2B market space. As more electronic transactions provide a flood of data on businesses, enormous opportunities exist for the savvy application of data-mining and data aggregation models. Data aggregation models re-package data into information that can be applied to other areas of business. By pooling together individual business data - such as how quickly enterprise X pays its bills - then businesses can access that network of information and use it for risk management and predictability measures.

Quick Facts on the Credit Industry

• The credit business - organizations that provide credit information on consumer and businesses - is a $1.5 billion industry according to Dun and Bradstreet.
• The commercial credit industry is 25-30% of the total market.
• Diamond Technology Partners predicts rapid growth in the credit market due to the growth of anonymous online transactions.
• The online credit markets are nearing a commerce threshold, according to a Forrester Research article, "Credit At The Threshold," by Jaime Punishill (January 1999). With the overall market poised to surge to $167.6 billion by 2003, the article assets that lenders cannot afford to wait to move their services online.
• The commercial finance industry, in general, is estimated to be $1.35 trillion in annual volume in 2000 with historical growth of 7.3 percent in the last decade.
• Commercial finance volume translates to more than $60 million in credit applications annually.
• In 1999, the equipment finance and leasing industry segment is comprised of more than 1,000 leasing companies.
• The leasing industry generated more than $220 billion in new volume and more than 10 million lease applications.
• This commercial equipment leasing market is expected to expand dramatically in 2000 with growth forecast at 14 percent to more than $240 billion.