Creditsafe, which was started in Norway 20 years ago and came to the U.S. five years ago, focuses on business-to-business credit reports, which for some smaller and mid-size equipment distributors can mean the difference between life and death.
“It comes down to the economics of your business,” Krogermeier explained. “There are extremely high up-front costs. There are high breakdown rates, so there are high parts rates and high labor rates on the maintenance. There are high costs in moving equipment around, and some companies have even come to us saying there are high loss rates in terms of theft or damage and things like that. All this stuff costs money. So when these guys go get a bank loan to fund these things up front, if one customer doesn’t pay or pays awfully slowly, it really hurts the cash flow of a private business.”
Dun & Bradstreet (D&B) is by far Creditsafe’s biggest competitor in the U.S. Founded 176 years ago, D&B has well over half the U.S. market for business credit reporting, according to Krogermeier.
To compete against D&B and others in the industry, Creditsafe offers what Krogermeier says are the lowest pricing options available in the credit reporting marketplace.
“We have the lowest cost infrastructure in our industry,” he said. “Nobody runs our platform. One of the reasons is that we’re one of the newer ones, so we don’t have a legacy system, but it’s also how we acquire data. We have a way to do that at a much lower cost. I am comfortable saying none of our competitors can meet or beat our price and still make money.”
That low cost should be particularly appealing to smaller equipment distributors, many of whom have not traditionally run credit reports on their customers, Krogermeier said.
“I think the reason a lot of equipment distributors didn’t look at credit is because it was very expensive. Our competitors used to sell a single report for $100. How many customers do I have times $100? That adds up pretty quickly and that affects my bottom line. We’re just trying to improve the model. ”
For dealers that do business outside the U.S., Creditsafe offers subscriptions that include access to international credit reports from 14 different countries.
“We are really one truly global company,” Krogermeier said. “You log in from one location with one password and you can hit any country from that one database, which no one else can do in our marketplace in our industry.”
Although business-to-business credit reports is its main business, Creditsafe also offers a number of other services to its subscribers.
“One of the products we sell is basically sales prospects or leads,” Krogermeier said. “We can use our database to basically look at a territory and identify within this territory how many customers, based on their SIC code, are potential customers for you and how many of those you actually have already. We can narrow that down and give you lists of other contractors, GCs (general contractors) and construction firms that may be potential customers for you. Then we’ll basically put that in the package in terms of company name, officer, email, phone number, things like that.”
Another service Creditsafe offers through one of its numerous business partners is debt collection, which is included in the annual subscription rate.
“We want people to use our products to help them improve their businesses,” Krogermeier said. “We want to help them sleep at night a little bit better, and let them focus on what really drives sales.”