Decoding Days Beyond Terms Credit Risk Insights with Creditsafe’s Steve Carpenter

Episode Overview

​Steve Carpenter serves as the Country Director for North America at Creditsafe, a global leader in business credit reporting and risk management solutions. With over 16 years at Creditsafe, Steve has been instrumental in the company’s international expansion, particularly in North America. He oversees business operations, sales, P&L, and product and data management, ensuring that Creditsafe’s services meet the diverse needs of businesses across the continent.

Before his current role, Steve was the Business Development Director for the Creditsafe Group, headquartered in the UK. In this capacity, he spearheaded global data acquisition efforts and forged strategic partnerships that enhanced Creditsafe’s data coverage and service offerings worldwide. His leadership was pivotal in establishing Creditsafe’s partnership with Equifax Canada in 2020, a strategic alliance aimed at delivering comprehensive international data coverage to Canadian businesses.

Steve’s extensive experience in credit risk intelligence and his commitment to innovation have positioned him as a thought leader in the industry. He frequently shares his insights on emerging trends, such as the integration of artificial intelligence in fintech and the evolving landscape of credit risk management. His contributions to industry publications and participation in global forums underscore his dedication to advancing the field of business credit reporting and risk assessment.

Episode Transcript

Steve Carpenter: If you have an invoice that you need to pay that invoice within 30 days, the terms of that invoice are 30 days. Lots of companies will pay it within terms. Lots of companies will pay late. So let’s say, for example, if I pay that 30 day invoice after 45 days and 15 days beyond terms.

Kevin Rosenquist: Hey there, welcome to PayPod where we bring you conversations with the trailblazers shaping the future of payments and fintech. My name is Kevin Rosenquist. Thanks for listening. Steve Carpenter started at Creditsafe 22 years ago making cold calls, and now he’s chief operating officer and working on expanding the company in North America. So what exactly does Creditsafe do? They are a global leader in business credit reporting and risk management solutions. Creditsafe helps businesses of all sizes make informed decisions by providing real time credit data and insights, including the Vital Data Beyond Terms metric, which tracks how late businesses are paying their bills. It’s a really interesting data point that all businesses should be considering when looking at who they work with. Joining me now from Toronto. Steve Carpenter, like so many people from the fintech space that I interview on this show you graduated with a degree in marine geography.

Steve Carpenter: I certainly did. Yeah it was my first choice to spend 20 years in credit.

Kevin Rosenquist: What was your plan?

Steve Carpenter: My plan initially and go by. That was Cardiff University back in 1999. And I was hoping to go into some sort of like an offshore seabed surveying the dredging industry that type of thing. When I stumbled across a company called Creditsafe back in 2002 and since then I never left and my career went in a totally different.

Kevin Rosenquist: It’s funny how that works sometimes. I know people and I’ve talked to people who are kind of like that they go into something and then they come out get a job and they’re like wait actually I kind of dig this. I think I might want to go in this direction and it’s totally different from everything they thought they were going to do.

Steve Carpenter: Exactly. My parents were pulling their hair out three years of university fees, marine geography wasted and to go into the world of business credit. But it worked out. It’s like one of those industries you don’t really know about.the sort of world of trade credit is something that you know as a standard person who worked in different industries, you don’t realize the sort of intricacies that go into it. So it’s been fascinating. It’s a really interesting world to be involved with.

Kevin Rosenquist: Yeah. Obviously you’ve been there for 22 years, around 22 years. That’s remarkable. It’s the only company you’ve ever really worked for, right?

Steve Carpenter: Pretty much.

Kevin Rosenquist: Yeah. What drew you to them specifically and what made you stick around for so long?

Steve Carpenter: So I didn’t even know about credit. It was totally random.that I ended up working. It was just like a,a recruitment agency gave me a position I turned up in, didn’t understand anything about the industry and just started working there as was like a telesales role making cold calls.

Steve Carpenter: Soon started to understand about the industry why companies need to use business credit reports that type of thing did a couple of years of like cold calling then moved into a different department.looking after customers like UK based customers. And then from there,Creditsafe had big expansion plans where we wanted to grow outside of the UK, outside of Sweden.and our CEO brought in a guy called Matthew, who was the head of our global expansion.I ended up applying for a job with him and that’s where it sort of took off because that was all about how do we set up creditsafe in other countries? How do we grow what we’ve done in the UK and use our business model to grow Creditsafe in Germany, France, Netherlands, Belgium? How do we eventually get to the US and now Canada and Japan? so yeah, it all came about. It was a little bit random. It was a little bit fortunate in terms of how it came to being credit safe. But as I say, it’s worked out. It’s worked out well. And now no credits for a big company like when I joined, we were probably 2530 employees. Now we’re close to 1500 2000 employees, so it’s grown. Grown massively.

Kevin Rosenquist: Well Yeah, You might. You must be a fan. I mean, you moved to another country. You moved across the world to stay with them and take on the Canada expansion. Correct.

Steve Carpenter: So that was five years ago. I moved to Toronto initially for a year. So it was two. And because we have like a strategic partnership with Equifax in Canada. Okay. So moved here to set that partnership up with Equifax. And then inevitably I met my future wife the first few months of being here and now five years later married still in Canada and now I’m getting involved in a US business as well. So,day to day operations of Creditsafe USA has been around since 2012, so it’s a much bigger operation in Canada. But now I’m sort of yeah, involved with both.

Kevin Rosenquist: So creditsafe provides businesses with credit reports on other businesses they may want to work with. Where does your data come from?

Steve Carpenter: So it depends. Like it depends on the country. So let’s say for example, in Europe most government bureaus release publicly available data on private companies. So if we say there’s a world of like public publicly traded companies, and then there’s private companies and with public companies, your Apple’s and Microsoft’s, that’s a company. There’s huge amount of disclosure. Those companies have to publish quarterly financial statements, shareholder relationships, all the companies they bought and acquired and things like that is all released publicly. And you’d associate companies like Standard and Poor’s, Moody’s, FactSet, Reuters with that type of data on publicly traded companies and financial analysis. Then there’s the world of privately held companies.and in Europe, those privately held companies even a company with five employees has been incorporated for two years. That company is mandated to publish Financial statements with the government every year, who the shareholders are who the directors are. The directors of the company have ID numbers. So you can link those directors across multiple companies. And in the US and Canada that’s not so much the case. So companies will incorporate with like a sector of state or provincial registry in Canada but that will be name, address who the principal of the company is. There’s no such thing as financial statements that are publicly available. There’s not even unique company names or unique countrywide ID numbers so it’s very difficult. So we get data from Secretary of state in corporations in the US, we get data from you know, legal data like lawsuits, UCC liens, things like that we bring in from other public sources. The biggest part of data across North America is trade payment data.

Steve Carpenter: So it’s we ask our customers and companies to share data on who their customers are and how their customers pay them every month. So that’s one of the most valuable sources of data. Apart from the core company registration data, which means you are a real company. Yeah. You’ve incorporated. You exist. Who the owner of the company is apart from that what do people want to know? They want to know is this company going to pay its bills on time? And is this company still going to be in business in 12 months time? So probably the most important source is that trade payment data. And just to give you an example, it is like let’s say for example, a big wholesaler in the US may have 20,000 customers that they supply every month. And those customers pay on credit. The wholesaler will send out a 30 day invoice to those customers for goods. Those customers have already received the goods, and they pay that invoice 30 days later, or they should pay 30 days later. What that wholesaler will report to Creditsafe is who are those 20,000 customers and how much credit have I issued to them? How much was the invoice worth, and have they paid that invoice? If they have, did they pay it on time within the 30 days? Did they pay it late? If so how many days late? Is that invoice still outstanding? Like over 90 days late. So that’s one of the most valuable sources of data that we use.

Kevin Rosenquist: Yeah and businesses can actually update their own report or they can at least view it and try to correct inaccuracies or issues with you guys. Right.

Steve Carpenter: Yeah. They can. So a lot of companies will want to see you know, if you’re a small company and you’ve been incorporated for a couple of years and you’re starting to grow and you want to apply for maybe a loan, you want to apply for trade credit with a supplier. You want to make sure the credit report on your company is 100% up to date and accurate, and reflect you in a good light. So companies can come to us and they can say well I want to look at my own credit report and you’ve got my name and address and everything. Right. But you’re showing I’ve got ten employees. I’ve really now got 11 employees.can we update that data? So we, of course go through a validation process where we ask for some validation or proof of these types of things, and then we update that in our database. And so that can be done on core things like which industry do they operate in. Because again a lot of companies will incorporate. And when they incorporate they may say, we’re going to operate in this line of business. That business could then take a totally different direction, and they end up operating somewhere else. So they can change things like the SIC code or the North American Industry Classification Code, which will then determine how we show them which industry they operate in. Things like the directors, if there’s alternative or new directors of the company, they can do things like that as well. So that core, you know we call it demographic or firmographic data which is the fundamentals of a company. They can update directly with us.

Kevin Rosenquist: Okay cool Yeah, I’ve run small businesses before and a lot of vendors would require me to fill out a form with trade references before we would get a line of credit. I always thought it was kind of funny since you know just sort of like references for employment. You’re never going to put anyone down who wouldn’t give you a glowing endorsement. So like it always felt kind of like a waste of time to bother doing it. Yeah. So basically it’s Creditsafe sort of a replacement for that sort of archaic method.

Steve Carpenter: Yeah. I mean that’s so interesting because so many companies still do trade references today. Yeah it’s amazing. Most of them still do like paper PDF documents. So it’s like you’re applying to be a customer of a wholesaler. They say fill out this form. It’s a PDF document handwritten. You just go and fill out this is my name, this is my address. This is my accounts payable person. And yeah here are two trade references. As you say, Kevin, you’re going to say here are two companies that I pay on time every month. Absolutely, you’re not going to give the company you’ve paid consistently for the last four years.

Kevin Rosenquist: The company that fired you as a client. Yeah. You’re not going to get that.

Steve Carpenter: Yeah, exactly But I think companies still like it as it gives them peace of mind that you are working with these suppliers. Sure, they’ll give you a good recommendation. Yes. This company pays me. They pay me a few days later every month, or they pay me on time. And so that’s a good recommendation. But then hand in hand with that most companies will say well, I actually want to use a proper business credit report because within our credit report there may be for example 30 suppliers who are sharing in data instead of two trade references. So you can now see well actually here are 30 other suppliers who share data on this company. And they actually pay these suppliers late. Or they pay some of them on time, they pay some of them late. And you can sort of distinguish between you know if you’re a company that operates in the restaurant industry, if you’re a restaurant and you’ve got primary suppliers, you’ve got secondary suppliers and you’ve got tertiary suppliers. So of course you’re always going to pay your primary suppliers on time because you don’t want to get cut off from a food supply or electricity or payment processing software or something like that.

Steve Carpenter: So you prioritize your cash flow to pay your top priority customers or suppliers straight away? Sure. Then you’ve got your sort of secondary and tertiary suppliers who maybe you can get away with paying your transportation company or something like that. You can pay them 90 days late, because if they cut you off and refuse to deal with you anymore, there’s plenty of other companies who can step in and you’d work with them instead. So yeah, a lot of customers choose to look at, well, I’m in this industry. I’m going to be a secondary supplier. How is this company paying their secondary suppliers. So you can really dig down into detail which is why you know, alongside trade references trade references will always have a place.and we’ve started working on processes like how do you automate those trade references rather than it being a paper PDF. How does it complete electronically? How do you send reference requests directly to those trade references with instantaneous responses rather than it being a sort of a paper manual process email over faxing over waiting for validation. But yeah that’s the sort of benefit of using a credit bureau as well as trade references.

Kevin Rosenquist: Yeah, I just remember it being such a tedious process. I’m like I got to fill this stupid thing out. And you’re right, I gotta wait three days before they get back to me. And I kind of need to order now. And like yeah, it’s definitely tedious.

Steve Carpenter: When you’re running a small business yourself, it’s like you incorporate a company. The first thing is you don’t have a credit history as a company. So, you know for the first year or so you may have to use a personal credit card or a personal loan with a bank or line of credit with a bank to fund the early stages of that business. But then you have to at some point get credit through the company because you need to build your company your company credit score. So then when you start doing cash up front cash on delivery type of things then a supplier will eventually give you ten day terms 30 day terms and things like that. It helps you build it up. But yeah lots of companies will ask for personal guarantees like you probably had you know when you were doing it, they’ll say well, actually we want to look at the personal Consumer Reports on you as an individual to see how do you manage your finances as an individual because a lot of the time that’s reflected in how you manage your small business as well and then the personal guarantees if the company can’t pay are you held accountable as an individual consumer as well? So that’s another thing a lot of suppliers do. Is that personal guarantee piece.

Kevin Rosenquist: Yeah, So let’s talk about data beyond terms or DBT.

Kevin Rosenquist: Can you start by kind of breaking down the significance of DBT for those who are unfamiliar?

Steve Carpenter: Yeah. So DBT is basically data beyond terms. So it’s like very simply how many days late does a company pay its bills so if you have an invoice that you need to pay that invoice within 30 days, the terms that invoice are 30 days. Lots of companies will pay it within terms. Lots of companies will pay late. So let’s say for example, if I pay that 30 day invoice after 45 days and 15 days beyond terms,on that invoice. So that’s a really key metric that we look at. Is that and again, like if you don’t work in the sort of industrial or trade credit space,you know, as a personal thing you go to the bank and you get a loan. With a bank you don’t have a choice if you’re paying back your bank loan. And that is typically a direct debit or standing order that’s taken out of your account every single month.if you go to a store you pay up front. You don’t have a choice of when you pay those bills. But as a company, when you’re issued with an invoice, you can choose when do I pay that bill? Do I pay them on time? If I’m struggling to pay my staff and I’ve got cash flow issues, I’m going to prioritize paying staff. I’m going to push the supplier back and pay them. Pay them late. So yeah, that’s where that DBT comes in. And it’s really like an underlying metric as to like how is the cash flow of that company. How much liquidity does that company have. Is that company struggling because they’re paying suppliers late. So yeah, DBT just a key metric as to how many days late is the company paying its bills.

Kevin Rosenquist: Yeah, obviously it reveals a lot about financial health and stability in your experience. What DVD DBT patterns are sort of the strongest indicators. Potential financial trouble in the future for a company.

Steve Carpenter: So it’s normally a break from the norm. So if you’re dealing with a company. Maybe that company because we sort of look at DVT or we look at payment experience in two ways. We look at so we’ve got a score like in our world which is the payment expectation indicator. And then we’ve got a payment behavior indicator. One of them looks at is this company capable of paying its bills. So someone like Walmart for example, of course Walmart are capable of paying the bills. They’ve got tons of money. They are able to pay that bill. Then the payment expectation is when can I expect to get paid? Yes, they can pay the bill, but do they choose to pay that bill late every month? So the most important one is probably can a company pay that bill? Does it have enough cash to pay that invoice? And then when can I expect that invoice to be paid? So if we look at for example, a company we look at like a two year history and see this company typically pays its bills 30 days late. So a 30 day invoice they’re paying after 60 days, which isn’t great. As a supplier, you know, you get your money 30 days late every month, but they’re consistently doing it all of a sudden. If you see that data on terms go up to 70 days, 75 days, you can see they’ve actually broken out of like a historical norm.

Steve Carpenter: Does that mean they’ve now come into some sort of cash flow issues? Are they in financial trouble. And they’re now starting to pay suppliers late? So that’s a key thing we look at is does that payment trend break out from the historical trend that would typically lead on to I mean you’ll typically see a company their DVT starts increasing. Once you see it start increasing or spiking. Then you may see for example, debt collection cases. Those suppliers will say I’m now 75 days late. I can’t collect my money from this company. I’m going to place this for collection with a third party collection agency. Then the collection agency will go after that. That money from the customer Estimate if they don’t pay the collection agency. Typically you would then go to a lawsuit. There’d be some sort of legal filing or legal action against that company. If you see like an influx in collection cases. Then an influx in legal filings, typically then that’s when it would lead to a bankruptcy. Or bankruptcy filing. So you can sort of see payment trend is really that first. Early indicator sign of a companies in trouble. And then it escalates into collections. Lawsuits and then eventually bankruptcies or insolvencies.

Kevin Rosenquist: Yeah, that’s really interesting. The sort of the delay the change in behavior like you said, you know because it’s obviously if a company files for bankruptcy or it’s having financial troubles that you know about that’s easy to know what they’re going through or at least you can kind of figure out what they’re going through. But yeah, those little things can definitely change over time. That’s really interesting.

Steve Carpenter: Exactly. And you find as well, by the time you get to legal filings, it’s normally too late.yeah. So when a company’s starting to have legal filings come in, lots of companies will monitor their customers and say, right, I’m going to monitor them. I want to know when there’s legal filings or when there’s a bankruptcy. But of course, at that point it’s too late. You’re probably not going to get your money back at that point. So the key thing to monitor for is a change in that data beyond terms. And, you know, if you’ve got a tolerance threshold which would say if they’re paying me, they could be paying me on time every month because I’m a key supplier to them. But they’re starting to pay everybody else late just because they’re paying me on time now they’re paying everyone else late. When’s that going to start impacting me? And should I start tightening my terms with this company now? Should I start looking at cash up front? Should I start looking at maybe reducing their line of credit with me because I’m worried about their financial strength when you see them paying out everyone else late and there’s some really good examples,that we’ve looked at where you see the build up to a bankruptcy or insolvency where you see that breaking out, and then within a few months, the companies filing for bankruptcy.

Kevin Rosenquist: Yeah, So it’s interesting because I think we often think about this kind of stuff as a before you do business sort of thing but do a lot of your clients, a lot of your customers, they come and they check on companies more regularly that they’re working with just to keep tabs.

Steve Carpenter: Yeah, they check on companies more regularly. They use like the monitoring services where they get pinged every day with an alert saying one of your customers, if you’ve got 5000 customers these three customers have started paying their suppliers late. We think you should take a closer look at these suppliers so they do that.

Kevin Rosenquist: And that’s cool.

Steve Carpenter: Other companies as well. So we give all of our customers the ability to share their payment data with us. So we’ll say you’ve got your customers who are paying you every month. Number one, sharing payment dates has always been thought of as like a little bit of a negative thing. It’s thinking if I share data like so when you’re running your own company, if your suppliers were sharing data on you to Creditsafe, Dun and Dun and Bradstreet, Experian, Equifax, the big commercial credit bureaus. And you should actually, if you’re paying those suppliers on time, you should probably be happy, because that means they’re reporting good payment behavior on you to the credit bureaus, which is going to help your credit score go up with those payment bureaus, which will mean you’ll get access to more lines of credit. It will help you grow as a business and your suppliers. You’ll potentially end up spending more with your suppliers because you are able to grow quicker, because you get access to funds from other places. But reporting payment data has always been thought of as a negative thing. It’s thought of you’re punishing your late supplier, your late customers for paying you late every month.so we say to our customers, look, if you’ve got your data that you can export, share it with us. You’re then rewarding your good customers who pay you on time every month. Yes, you’re punishing your bad customers who pay you late every month. But it’s also a deterrent for those bad customers who pay you late every month. If you have on your invoice, for example, we share payment behavior, both good and bad with credit bureaus. If someone sees that on an invoice and they’re looking at two invoices to pay, one doesn’t share with credit bureaus. One does. They’re probably going to pay you first because they don’t want your credit score or their credit score to go down with the credit bureaus. So they’ll prioritize paying you because they know you’re sharing data. So that’s the key thing and a key message you try to get across as well.

Kevin Rosenquist: I’m going to start adding that to my invoices. Thanks, Steve, I appreciate that you should do it.

Steve Carpenter: Like we give our customers a little invoice stickers.and they can put on the credit logo and it’ll say we share payment data both good and bad with Creditsafe. And it does help. It definitely helps. I know if I’m paying a credit card or two credit cards and one shares with Equifax, Experian and TransUnion and the other one doesn’t, I’m going to pay the one that’s giving that data to the consumer credit bureaus.

Kevin Rosenquist: Yeah exactly. Are there any red flags that you believe are often overlooked?

Steve Carpenter: I’d say the biggest one is that DVT, like DVT, should be used in conjunction with other things. Of course, like we do things like we’ll do the credit score in a company and a credit score is based around those terms, but it’s also based around do you have legal filings? How long has the company been incorporated for? What industry do you operate in? Because of course certain industries are much higher risk than other industries like the food service and restaurant industry as an example is probably one of the highest risk there is. Like the number of restaurants that go out of business is massive. So if you’re dealing with restaurants, you know, you’ve got to have a much tighter control over, credit that you’re given as well. So I’d say those things and lots of companies will share financial statements as well. So outside of publicly traded companies, if you’re a supplier, you’re onboarding a small new business. You could actually request that they share their financials directly with you. Those financials aren’t publicly available, but there’s nothing to stop you asking for the company to share them with you. You can then look at them. Of course, they’re not audited. Financials like you get in a lot of countries that have been audited by PwC or Ernst and Young or someone, but at least it gives you a feeling for that.

Steve Carpenter: And financial strength of that company. The other thing you can do as well is you can do like a bank verification or a bank reference so now things like open banking is becoming more sort of freely available. Open banking is huge in Europe and it’s starting to accelerate in North America now. So there’s companies out there like plaid, Flink, Kodak who have built integrations with all of the big banks and if you’re onboarding a new customer, you can ask that customer to go to like a white labeled page and put their bank details. And it would send you as the supplier a report to say yes, that bank account is real. Yes, that bank account belongs to this company, which helps eliminate fraud and then within there as well, it will say, here’s the current balance of the current account, which may be $200,000. You can see the historical balance that has that balance fluctuated. Does it change much? So again, at least it gives you an indication as to how much money does that company have in its bank at the moment as well. So things like that are definitely developing. And we’re linking all of that type of data into our reporting structure as well just to help give customers that extra info.

Steve Carpenter: And the other thing, the other red flag, a lot of the time is fraud. And so we see small business fraud is huge, especially now with AI advancing and everything customers or companies or a person impersonating a company and going after credit, the real company doesn’t even know that they’ve been impersonated by this business. And that’s why things like this bank verification piece is really important. We always suggest our customers, they use some sort of compliance data as well, which we’ll look at money laundering, fraud,on the greater scale of things, things like sanctions because again, if you’re a supplier and you’re selling to a business that’s been sanctioned by the US government or something like that, you could get into serious trouble by supplying sanctioned businesses. You should always run that type of check as well to see is there a anti-money laundering? Are there fraud cases? Are there any sort of like workforce infringement, sanctions, politically exposed persons, things like that. So again there’s lots of sources of that data out there. We bring that data into our platform as well because that’s a key thing to use alongside the core credit data as well.

Kevin Rosenquist: Yeah, it’s a lot more robust than a lot of the other credit reports that you can get on businesses from other vendors.

Steve Carpenter: Yeah. I mean, as I say, it’s like it’s trying to combine that data from so many various different sources and then giving the customers the ability. The other thing as well is like we do encourage our customers as well to create their own scorecards because we do things like we create, you know, a credit score on a company, but that’s like a generic credit score that’s serving all industries. But if you’re a supplier, you may have different risk thresholds or risk tolerances than other companies. So you could say, for example, I actually want to put less weighting on data beyond terms, and I want to put more weighting on the industry they operate or how long the company’s been in business. Or I want to incorporate how that company has paid me over the past ten years that I’ve been working with them into my own customized credit score. And again, a lot of lenders and a lot of banks and financial institutions will do this. They’ll create their own credit score, which incorporates their data, external data, our data. Maybe they’ll even bring in the consumer data on the owner or the principal of the company and create, like a blended, a blended score that they want to use for their own internal purposes. So yeah, some of the bigger suppliers will do that will do that as well.

Kevin Rosenquist: In light of recent inflationary pressures, supply chain disruptions, fluctuating interest rates. Have you guys seen any recent shifts in DBT trends that point two maybe what you might call a new normal for payment terms across industries.

Steve Carpenter: So a little bit like I’ve got some stats here. Like we were looking at like days beyond terms. So in 2023 we looked at the US as a whole. So we looked at what is the average DVT across the entire US universe from all the data we get. And the average was 1717 days, and the average in 2024 is 20 days. So it’s gone up by three days. The thing to think about as well, though, is most big companies or most companies that aren’t experiencing cash flow issues or financial stress, they’ll always pay on time. So they’re paying on time. Then you’ve got that three day difference could be made up from lots of other companies, or a smaller subset of companies that have started going from ten days late to 40 days late. That would only probably push the average up by a few days.so that few days does make a big difference when you consider it’s only a smaller subset of companies that do have.

Steve Carpenter: That financial stress as well? And definitely everything you mentioned are like the contributors to why companies start paying late as well. Exactly that Interest rates, like where I’m based here in Canada, they had the Ceba loans during Covid so companies had a Covid relief loan of like however many thousand dollars from the government. And then lots of those loans like they find out are fraudulent loans again or fraudulent companies apply for loans. Then you’ve got for example, the government recently said if you pay back this loan upfront, we’ll give you X percentage. I think it was 10% or 20% relief on that loan. So you only pay back 80% of that loan that is then cleared. So what a lot of companies did was they then went to a lender or a financial institution to borrow that money to pay back this loan, and that’s now cleared with the government. But of course they’ve now got a higher interest rate loan with the bank that they need to pay back and they’re probably going to prioritize paying that back as opposed to paying their suppliers right on time as well. So it’s all about that prioritization. Again, what the companies choose to pay first compared to what can they pay later. So yeah, all of those things have a big impact. And we’ve definitely seen that an uptrend and things like bankruptcies Canada, US we’ve seen much higher bankruptcy rates like recently compared to 2023 and 2022 as well. So again, that’s a knock on effect from suppliers or customers paying suppliers later as technology.

Kevin Rosenquist: Changes and advances at incredible speed. What are you most excited about in the fintech space as it relates to new technology?

Steve Carpenter: Definitely automation. So yeah, more and more companies want to automate. And exactly what you said at the start of the call that old trade reference paper trade reference thing that hopefully you should see that phase out over the coming years because there’s more automation companies are able to get that open banking style data as well. So I’m really excited about that. Open banking data and seeing that being made more available on small businesses as well. Like we’d love to see things in North America. Like I said, in Europe all companies have to publish financial statements with the government, which are released to the public. So anybody can go and get the financials on any small company from companies House in the UK, or from MP or Insee in France. All of that data is available. I don’t think it will happen in North America, but we’d love to see at some point government mandating that data be available, because then you’re not just reliant on how does that company pay its bills. You can actually see the balance sheet, the profit and loss statement for that company as well, which would really help.the other exciting thing as well, which again, exists in lots of other countries and it’s way behind in North America, is the ultimate beneficial registers or ultimate beneficial owner register and persons of significant control.

Steve Carpenter: So most countries in Europe there’s a bio register. So you can actually look at who are the shareholders behind the company. And you can look at are those shareholders also owners of other companies as well. Again, here in North America there is no sort of publicly available register. So when you have your company, no one can go in and actually look at who owns that company. Is it yourself? Do you have partners who own that with you? Are there other funds or VC funds that own just that company? So that type of data isn’t available. And again, that helps combat this. The small business fraud as well. If companies are able to go in and look at a publicly available register to see is this person who they say they are, are they really the shareholder of this company or the owner of this company? And that would help. So that type of data we think is coming. We see you know, government releases all the time saying they’re working on these registers. And in certain industries they are gradually being rolled out. So fingers crossed that will happen. It will be more publicly available.

Kevin Rosenquist: Variable, any insight on why North America has been so slow to adopt that?

Steve Carpenter: Probably. I’d say the biggest reason is when we look at the US, you’ve got 50 or 50 Secretary of state incorporations and they all operate like sort of not independently but a company registers for example, in Delaware, a company registers in California, a company registers in Pennsylvania. And there’s nothing even that links all those companies back together to show this is a subsidiary or this is a branch, and it’s a really messy system. And because you’ve got those 50 sort of individual state incorporations, it’s very hard to tie everything back together.whereas somewhere like UK or most of the European countries, there’s one central repository. So in the UK companies House is the government run organization. That is where all private companies, public companies incorporate. It’s where they publish financial statements is where you can access the directors and owners of the business. They all have a unique registration numbers, VAT numbers. You can’t have the same company or two companies with the same company name. So there’s all these sort of restrictions in place which helps keep it all centralized. So then things like beneficial ownership, it’s much easier to coordinate US and Canada. It’s so provincial or state driven as opposed to one overarching sort of organization that does it for the whole country.it just makes it much more complicated. And that’s probably why it’s so slow compared to the European countries, where it’s far more advanced and it’s smaller, like, again, somewhere like Sweden. Yeah.where like half a million companies or a million companies. The US. Us, if you look at how many companies are actually incorporated in the US, I think it’s 120, 150 million companies. So it’s a huge number of companies. Lots of those don’t actually really trade as businesses. They’re just like shell companies or they’re just like company corporations, but it’s a huge number and it’s, you know, it’s a mammoth task to oversee all of that.

Kevin Rosenquist: Yeah. That’s true, that is a lot. That is a big difference between the country like Sweden, a country like the US.

Steve Carpenter: Yeah, exactly.

Kevin Rosenquist: Well, Steve, with Creditsafe, thanks so much for joining me today. And I just realized a second ago, like despite us having the same sense of personal style, we also shop at the same. We also decorate the same. we both have maps behind us. I just noticed that.

Steve Carpenter: I just need to get some tattoos now.

Kevin Rosenquist: Yeah, you gotta get some tattoos. Maybe a guitar behind you.

Steve Carpenter: Exactly.

Kevin Rosenquist: Alright well, Steve thanks so much for joining us here on PayPod. Really appreciate your time.

Steve Carpenter: No problem, Pleasure. Thanks, Kevin.