As a business in the current economic climate offering finance of net payment options for new or even long term regular customers can be an incredibly risky business, especially if you do not have enough liquid assets to cover a loss of income from not receiving a payment on time, or at all if the company goes into liquidation where you would only receive a minimal amount of what you are owed.
Although it is considered an essential to check new customers credit rating you should consider regularly checking the company credit reports of your current customers. This will ensure that they are not facing any financial difficulty or credit problems which could lead to unpaid bills or damage to your own business. In cases like this due diligence could save your business.
There are various levels of company credit reports available so you can tailor the cost of accessing such reports to your own budget and requirements. If you are worried about having to purchase an excessive amount of expensive credit reports then you should compare prices from various providers and remember that even the most basic reports have high levels of detail which may be sufficient for your requirements.
A standard report consists of all the basic information about the company such as the registered address, trading address, legal form of the company and director information. This is essential when checking for fraud and identify theft. The standard report will also contain recent accounts and CCJ information if applicable for that particular company.
The more advanced and therefore more expensive company credit reports include further detailed information such as payment profiles supplied by a third party. These payment profiles detail the company's expected monthly payments to other businesses and the net periods which they operate on. Other financial information such as profit and loss statements and balance sheets are also featured in the company credit reports and these give an in depth financial profile of the business, the potential profitability and details of the company's assets and liabilities. This information is essential when offering high levels of credits or considering investing in a business and can be used in conjunction with the companies annual report for a bigger overall picture.
The most important part of the company credit report included on all levels of credit reports which lenders are the most interested in is the credit rating. Using information from previous credit, loans and history a company is given a credit rating on a scale which ranges from Maximum Risk to Very Good credit. You would therefore be able to make a quick decision from just this small section of information on its own!
You should consider regularly checking your own company credit reports to check for any anomalies or potential instances of attempted identity fraud, this could therefore save you a lot of money in the long run as well as your company's reputation and ability to get credit. If you have a lot of credit accounts through loans and finance agreements you should also check your own company credit report frequently to keep track of your credit accounts, ratings and any potential changes.