How Amazon Can Build a World Class B2B Credit File – Post 2

Yesterday I wrote about the need for business credit data, the current models, and why traditional models need improved.   Sales organizations need reliable data to make customer credit decisions.  Purchasing organizations need reliable data to assess supplier financial risk.

Businesses spend significant sums managing these needs. And on thinking about who is in position to disrupt the current status quo, Amazon and Google (and the banks themselves) can gather the right credit data for their customers.   They may or may not.

When you are THE gorilla in the B2B world like Amazon, you have a flow of information around physical procurement and supplier fulfillment second to none.   When Amazon gathers information on companies to enable them buy and sell on their platform, they have an opportunity to collect critical information about each and every company.

They have relationships with millions of private companies, some that may be owned by public companies. Increasingly they are helping to run small and medium size businesses procurement.  These companies interact with Amazon many times and Amazon can and does collect and leverage huge analytics of their transactions. But when you stop and think about it, Amazon is also in a position to capture credit information that can be a game changer in the credit risk world.

So you ask, how can Amazon disrupt this model?

Selling credit information is an enormously profitable business. But what Amazon has could transform the way credit is intermediated.  Amazon is in a position to collect information about companies that both buy and sell things on its platform that can provide far deeper and richer information than credit bureaus.

When companies first transact with Amazon, they can build a credit file of information that is pertinent to understanding and managing counterparty risk. Amazon has the right to ask for financial statements because they take the credit risk of private companies in a commercial relationship. They ultimately have to make a credit opinion.

Information that could be captured includes things such as which legal entity from the company they are contracting with, the ownership structure, credit information, financial statements, payment history, payment guarantees, etc.  There is nothing that stops Amazon from asking a private company with limited financial statements about its ownership structure or if they have parent guarantees.

This information can be valuable in the context of evaluating counterparty credit risk.  Firms, including banks and companies, make decisions which leads to opinions on credit.  These opinions lead to actual performance, and judgments can be made whether the methodologies around forming opinions need to be improved.

Amazon (or even Google) is certainly in a position to enhance this credit analysis process. If Amazon gathered the right information so people can do financial analysis to form credit opinions, it could lead to something that could be viable.

What data should Amazon collect? Do they even know how disruptive they can be in this world of credit information?

Jason and I see lots of opportunities here, and the changing dynamics of how credit is formed, underwritten and injected into supply chains is becoming pretty impressive compared to traditional methods. If you like to reach out to us, you can contact me at dgustin(at)

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