The Benefits of Credit Checks For Small Businesses
You have to get paid for your services and products to stay afloat, but knowing which customers will be good payers and which ones will take you for a ride can be a tricky business. It may be worth while to learn how credit checks can help you.
Whether you are thinking about supplying a new customer or you are already selling them your products or services, getting credit information on them can cut down your risks of invoices going unpaid. A credit check is essential if you’re thinking of extending credit to a customer. If you can see past and present information on how firms pay their invoices you can make quicker decisions about doing business with them and put your mind at ease.
Simon Streat of Experian UK&I says: “Credit information plays a vital role in helping businesses to make smarter decisions when it comes to understanding the level of risk associated with potential new customers or suppliers.”
It won’t always be possible to get a credit check on a firm because the credit agencies have incomplete information and so don’t publish a report. Sometimes a credit check won’t be complete because suppliers haven’t reported a firm’s payment history to the credit agencies. That won’t necessarily mean that your potential customer will be a bad payer but it could be worth you talking to other customers or suppliers and doing your own check.
Don’t forget that, just as you want to check up on other firms, they may want to check up on you. Your credit report is an important reflection on your company – it is almost an extension of your brand and company image. How other businesses see your rating can have a direct bearing on whether they do business with you or not.
The better your rating, the easier it will be for you to get funding and investment. A good rating may allow you to negotiate lower interest rates with other companies. Make sure your credit history is accurate and up to date.
Monitor your own credit report regularly. Many agencies allow you to sign up to alerts when fraudulent activity on your accounts is suspected so you can react straight away.
Credit reports on other businesses and your own report are invaluable to your business. If you haven’t already, check your own report and start checking out other businesses you deal with, especially if you are giving them credit. You can find the main credit agencies online and their processes are easy to follow.