Credit Checks
Credit checks are advantageous when deciding which
companies to trade with. Credit checks provide you with
important financial information as to the company's
financial status, therefore allowing you to make an
informed decisions.
As most companies choose to extend credit to clients,
credit checks should be used as a major part in the
decision making process. Knowing the clients' past financial
history will give an indicator as to the level of trust
you should give to them.
When to use Credit Checks
Many large businesses and companies will extend credit
to their clients as they find that it is often easier
and faster to do so, having a large number of clients.
However if you are a small or medium sized company,
this practice can be potentially harmful. The client
may delay payment of goods or services; they may not
pay at all; or they are not even who they say they are
and are making fraudulent transactions. Although larger
companies are able to absorb small losses, smaller companies
cannot afford to do so. Obtaining credit checks on the
potential client will therefore allow you to assess
them before making a decision to extend credit. Companies
should therefore make it normal practice to obtain credit
checks on all potential clients. This practice will
reduce the risk of bad debts occuring at a very low
cost.
Credit checks should also be obtained on new and potential
suppliers. This practice will deter bogus suppliers
who may ask for money upfront, and never deliver the
goods. You will also know who to contact and where to
go if there are any problems with the goods.
In general, credit checks should be used as a reference
guide as to the financial status of a company. It also
lets you know the legal status of the company and is
a good indicator as to the future viability of the company.
Credit checks are an aid to minimise the company's risk.
- Obtain credit checks on all potential clients, this
will let you see their financial history and also
how good they are at paying back credit. It will also
help you to set appropriate credit terms and conditions
with the client.
- Obtain credit checks when using and switching to
new and potential suppliers. This will allow you to
verify the exact legal entity that you are dealing
with.
- Ongoing credit checks should be carried out on existing
clients. This will alert you to any changes with the
client that may affect how quickly they can repay
their credit. You can then set revised credit terms
with them.
- Ongoing credit checks should also be carried out
on existing suppliers.
checkSURE Ltd's Online Credit Checks
Credit checks can now be carried out online using
checkSURE. Reports are generated online immediately
after payment and therefore the costs are cheaper, saving
postage, packing and administration costs. There is
an added bonus - credit checks from checkSURE are updated
daily from Companies House which means that you need
not wait for data that may already be out of date when
it arrives to you.
There are also many benefits to using checkSURE for
your credit checks. Registration is free and everyone
receives a personal online portfolio to keep their past
company credit checks in. checkSURE also provides a
free email alert service which emails you everytime
there is a change within your portfolio of companies.
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