The Benefits of Company Credit Checking for Small Businesses


Banks and big businesses have been carrying out credit checks on their customers for a long time but what about smaller businesses? Shouldn’t they be doing it as well? There are a number of reasons why anyone who runs a company should also consider the following benefits of company credit checking.

Get to Know Your Customer

Before you get into any new business relationship it is a good move to find out more about the person or company you are going to be doing business with. A credit check lets you fill in the blanks and fully understand who it is you are dealing with and what their current credit situation is like. Given the importance of receiving money which is due to you there is simply no excuse for taking any chances in this respect. By getting hold of a business credit report* you can very quickly understand exactly who it is that you are dealing with.

Avoid Risks

To understand the risks involved in not getting a credit report carried out we need to consider what might happen if you take on a customer you don’t know enough about. It could that they are already up to their neck with credit from other businesses and that they are unlikely to be able to pay back what they owe on time, if at all. Having one or more people owing them money is what destroys the cash flow of many businesses, so if you can understand the risks involved in this and do something about it you will be giving your company a much better chance of staying clear of this problem.

Avoid Fraud

Fraud is a big enough problem in the business world these days for it to merit its own point here. It doesn’t make sense to hand out goods or services or cash to someone when you aren’t even 100% sure of them or their background. Yet, this is exactly what some companies carry on doing, despite the modern methods available to us in terms of credit checking.

Identify Opportunities

Of course, we can’t afford to just limit ourselves to looking for the bad things which we might come across. We also need to look for the good things as well. Anyone who runs a business knows that a big part of the secret of success lies in identifying new opportunities early and then getting to work on. Another of the big benefits of company credit checking for small businesses is that it allows you to find out whether or not the people you are doing business with could take out more credit with you than they are currently doing and still pay it off comfortably. This could be the key to developing a stronger working relationship with a customer who has a strong credit report and who can send a lot more business your way if you propose it to them.

Find Out About Changes of Circumstances

An interesting benefit which you might not be aware comes with the business monitoring element of credit checking. With this approach you get to find out about any changes of circumstances which could affect the relationship you hold with a business. In the modern commercial world situations can change very quickly and you won’t want to be left handing out more and more credit to someone who simply can’t afford it anymore. By keeping abreast of what they are up to and what other credit and commitments they have recently taken on you will feel a lot more comfortable about the long term health of the relationship you have with them.

How much do company credit checks cost?

The biggest factor that stops most small businesses from credit checking new customers is the perceived cost. Actually though, business credit reports cost less than you might think. Experian’s ‘Business Check’ service is a pay as you go program that allows you to credit check a company from as little as £8.99 for a basic report with more in depth checking available if required. Money Bulldog readers are also entitled to 30% off their order when they visit the Experian website by clicking here.*

When you consider the potential cost of providing credit to a business that may be in a poor financial position, £8.99 seems like pretty good value to me.

4 Responses to The Benefits of Company Credit Checking for Small Businesses

  1. Pauline says:

    Sounds like a small price to pay to make sure your orders will be paid. And since you have some recurring business generally you only have to check once.

  2. Lorillia | Your Money Mentor says:

    Company credit checks is a good idea, if your business is B2B. Unpaid receivables or net 30, 60 or 90 accounts is never good for a business owner. I prefer to get paid upfront to eliminate outstanding receivables.

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