In the context of business, the term “operating status” refers to whether a company is still active. “Operating status” is typically defined as either “open” or “closed.”
If a company’s operating status is “open,” that means the entity is actively conducting business. By contrast, when a company’s operating status is “closed,” they aren’t open and aren’t conducting any business. Business closures can be temporary or permanent.
How can you tell if a business is open or closed?
There’s no single source of data about operating status. But you can combine a few different data sources and methods can give you clues:
– Credit bureaus
– Online sources and profiles
– Manual verification
Data from the credit bureaus reflects payment delinquencies, which provides insight into the financial status of a company. This data tends to be a lagging indicator, as it may take up to six months for credit data to be available. Online sources, including review sites, news, profiles, and the company’s own website, help paint a picture of the company’s activity level. Finally, manual verification — that is, attempting to call or email the business directly — can provide more certainty about operating status. (Though if you have a large number of businesses to verify, manual verification can become burdensome.)
The most accurate operating status data will combine multiple data sources, because one data source alone likely isn’t enough. Consider: many businesses may stop posting on social media or updating their website while rebranding. If you were to look only at the freshness of their digital profile, you might falsely conclude that they are closed.
Financial institutions in particular can benefit from accurate operating status data. A business’s operating status provides important context about the viability and financial health of a business. Even a temporary closure can indicate that a business is in distress. During times of volatility and uncertainty, such as the COVID-19 pandemic, having insight into business operating status is especially important. Over 100,000 small businesses permanently closed between early March and early May 2020, according to a Harvard study.
Card transactions stability data is one type of data that offers a strong indication of a business’s stability and operating status. The data reports on how frequently a business is receiving credit or debit card transactions over a one-month, three-month, or twelve-month period.
Risk managers and underwriters can use operating status data, like card transactions stability data, to understand a business’s overall financial health, mitigate risks before major losses occur, and confidently monitor overall risk exposure. Marketers and salespeople can use this data to ensure they’re targeting viable businesses. This reduces wasted spend and has the potential to improve campaign ROI.
