With the current economic climate demanding tighter payment terms and more visibility over your clients ability to pay, company credit checks have become an important part of day to day business. A simple quick check online can save hours of chasing payments and ensure you have a good idea as to the state of your clients finances.
Debt collection can be costly and time consuming, so by selecting the customers you deal with based on their ability to pay you can reduce your exposure and help ease your cashflow in these touch economic times. It is also important to get regular credit checks on your largest clients, time can change a companies circumstances quickly, especially in today’s fragile economy, by ordering regular checks you can keep on top of customers that get into difficulty before it filters through to your invoices.
The ratings give you an indication of the credit worthiness of a business based on a number of factors, and some complex number crunching behind the scenes. They are a guide you can use when looking at a company report and trying to agree a recommended limit with your client. Company ratings are based on the last available information files at Companies House, they are not like consumer credit reports where financial institutions report your information back on a monthly basis, so most ratings are unable to take into account missed payments etc.
The information from the company accounts, historical accounting information and any county court judgments help a rating be established. With company reports you can also see the full details of any directors in the business, and any other companies they are involved in, which can be useful when looking a new startups or if a company changes its name.
Overall the credit rating takes into account many different elements, mainly taken from the accounts the company files, and should be used as a guide to come to your own conclusions about your client. A simple fast online check is all it takes to help provide peace of mind and get the information you need to make an informed decision on your client.
It can also be useful to check your own company credit rating, especially if applying for new business finance or credit lines with suppliers, identifying your weak points means you can instantly start working to improve your company credit rating.