Credit Worthiness

Extending credit to companies you want to do business with is an essential part of business today. For SME's and very small businesses however, the decision to extend credit can involve numerous financial concerns. These need to be answered beforehand to avoid a host of problems afterward. The question that we come back to 'Is this company credit worthy?'

Credit worthy (or credit worthiness) is defined as having an acceptable credit rating, worthy of having credit extended to them. But what does this mean for you and your business? Is your company seen as "credit worthy"? How can you assess the credit worthiness of a company you want to do business with? What resources are available for checking if a business is credit worthy?

Why assess credit worthiness?

Customers that default on payment or continually pay late are a headache for all companies, and generally are customers, that where possible would like to avoid. Chasing up unpaid invoices costs businesses both time and money.

As all too many businesses who have had an overly casual approach to credit checking have found out, not all companies are credit worthy and extending credit with little or no enquiry into their credit history can be dangerous.

Appearances can be deceptive, and although a prospective customer may say all the right things, if you do decide to trade with them without checking their financial history first, it could adversely affect your business.

For a small business cash flow can be affected detrimentally if payment is always late or not all, and the need may arise to involve debt collection agencies.

It is thus important to check the credit worthiness of:

  • Anyone you trade with on a regular basis
  • Businesses you trade with periodically
  • Companies that ask for higher levels of credit
  • All new and potential clients

How to check if a company is credit worthy?

Obtaining a credit report is a key way to determine a businesses means and willingness to pay on time. Detailed information on the company will help with the decision of whether to extend credit and on what terms.

A company credit check is an asset to your business to minimise the risks in extending credit. A credit report from checkSURE contains relevant financial data, CCJ information, as well as a credit score and limit. Using this information will allow you to make an informed decision as to whether you want to trade with them.

There are many benefits to using an online credit check service to check a company's credit worthy. The reports can be accessed in minutes and so save you time when making the decisions involved with gauging the viability of the companies before trading with them.

Credits checking both existing and new clients will greatly reduce your companies' exposure to risk and help you to determine if a company is credit worthy.

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