The credit reference community is formulating a new approach for the post crunch economy. 

Businesses thus entered the recession with varying chances of survival.

Many companies are still seeking access to finance in this environment.

For these firms the importance of ensuring their creditworthiness is assessed by lenders using up-to-date, accurate and trustworthy information has been accentuated.

This scenario has already impacted the credit referencing industry. Credit seekers are demanding that Credit Reference Agencies (CRAs) base their company assessments and accompanying recommendations on current management account information. Taken at face value, this hardly seems unreasonable. Many companies have, historically, made data of this kind available to credit insurers and banks upon request.

CRAs have, however, long remained cautious in their response. This seems strange given that faulty analyses will not result in CRAs suffering direct financial hits, as is the case with the banks and other financiers.

The explanation is essentially quite simple. CRAs’ reputations and commercial viability hinge upon the integrity of their data. In a market where perception invariably weighs more heavily than reality, the prospect of basing credit recommendations upon unvalidated management accounts is wholly unpalatable.

Indeed, this is also a question of integrity and morality. Who in their right business mind would want to source information from a credit reference agency dealing in unvalidated, unstructured and unauthenticated account data as a basis for its reporting?

This is the central reason why the CRA community is now adapting its approach; introducing new methods by which credit-seeking companies can ensure validated monthly management account information is able to be factored into credit reference agency recommendations. My own business is playing a lead role in this process but the spirit of these changes must be embraced by all CRAs.

These developments are one piece in a jigsaw illustrating a wider trend. The current climate dictates that small firms wanting credit access must be more prepared than ever to share detailed information about their activities and submit it for independent scrutiny.

This approach will be essential to replenishing the flow of credit in the UK and global economy. Hiding behind a cloak of commercial confidentiality when probed on business performance is not going to ease the credit log jam.

Monthly management accounts are not, however, the only data sources relevant to this discussion. Trade payment data, an established means of analysing the habits of companies when it comes to paying bills, can serve as a valuable complement to this information.

Gathering this information on customers depends on suppliers and lenders gaining access to those firms' sales ledgers. The practice is already commonplace across the Atlantic. US credit reference agencies have long gathered this data in lieu of any legal obligation being placed upon firms to file financial information with a central Government registry equivalent to Companies House in the UK.

Lender demand for such information is now becoming more widespread here in the UK. This is good news as it reinforces the need for transparency as the central plank of responsible lending decisions, which have at times themselves been the exception rather than the rule.

And with respected bodies including the Association of British Insurers now openly advocating the need for a culture of information sharing to become ingrained across all sectors, those companies desiring credit are likely to have to co-operate accordingly.

My focus in this piece on current data should under no circumstances be interpreted as wanting to sound the death knell for the use of statutory account information, of the kind filed at Companies House, as part of the credit analysis and recommendation process.

On the contrary, statutory filings provide an important track record of past company performance, and provide a dipstick test for identifying those companies which were in less than healthy financial shape before the economy entered choppy waters.

Of course, things will get better eventually. But the embracing by all of a culture of transparency, information sharing and openness will surely accelerate the pace of the upturn whenever it transpires.

This mindset needs also to be embraced by company owners and decision makers now, not tomorrow. When it comes to applying for credit in the hopefully more prosperous years of 2010 and 2011, no business will want to be hamstrung by credit-giver reliance on the evidence of statutory accounts information filed at Companies House documenting performance during the atypically challenging years of 2008 and 2009.

This last point provides valuable final food for thought. The risk remains that companies will become so hypnotised by the light at the end of the tunnel they will overlook what awaits in the open air. If the dreaded prospect of a ‘double dip’ in fortunes is to be avoided, contingency planning of this kind must begin now.