In the United States, almost unlimited sources of credit information are available. Over the years, these sources have steadily expanded based on the mutual confidence and respect among credit executives themselves and among credit personal and customers. While technology has played a significant role in the gathering and distribution of customer credit related information, there is still a requirement for prudent credit reference information to be exchanged, one-on-one, between credit professionals. Of primary importance in the development of this information is the concept of confidentiality and the privileged nature of credit data.

Taken in its literal meaning, confidential information prevents a company from giving any credit data about its customers to anyone. However, under these circumstances, the free interchange of credit information could not survive. It might be more accurate to say that customer data is held in trust, rather than on a confidential basis, by credit professionals. Customers should realize that creditors will only release factual credit intelligence to other creditors that have a legitimate interest. Customers need to trust their creditors to have good judgement in knowing to whom and how much information may be released by their suppliers.

Credit data must not be released to unauthorized companies, agencies and others; and importantly, it must be kept confidential within you own organization. A policy should be established (see part 2) as to what information will be released and who may have access to it. Your policy must adapt to the size of your organization, the extent and nature of your customer data, and the use of it by the person or organization requesting the data. It is conceivable that an untrained person could seriously jeopardize the relationship between the customer and your company, and subject your company to a lawsuit through the release of information which the customer considers detrimental to its situation, reputation or character. It is critical therefore, that all credit professionals dealing with credit inquiries be properly trained in credit ethics and principles. (See Credit Risk and Operations: Ethics and Laws Affecting Business to Business Creditors).

Trade information comprises the facts that are obtained from merchandise suppliers of a customer. It can include such facts as: the recent high credit, amount owing, amount past due; whether customer payments are discounted, prompt or slow and, if slow, how many days; whether a supplier has referred the customer to a collection agency; and other facts about the buying and paying record of the customer. This is vital information. It describes how the customer actually pays bills, regardless of other financial facts.

Supplier Trade Information, Part II - Sample Trade Reference Policy

The purpose of this policy is to document the process for providing trade references on customer accounts. References are provided by (state your requirement e.g., phone, fax, mail, e-mail, electronically, etc)