By building a credit checking function into your account opening process (or even when first engaging with a potential client to avoid tendering or pitching for work that realistically won’t ever get paid for) will give you an insight into a customer’s ability to settle invoices on time. A robust credit checking process will highlight any potential risks long before they actually affect your cash flow when they can be harder to recover from.

Unpaid invoices and overdue payments are an issue for many businesses with some companies waiting to be paid on average up to 72 days according to recent research. The lifeline of B2B sales is based on credit and in many cases, payments are late, leaving you with no choice but to pay your own suppliers late because of your own financial management issues.

Delays in payments cause problems that can affect your company’s performance and typically generate several weeks of administrative work chasing outstanding payments. This in turn affects your own cash flow and your ability to plan ahead.

Often credit is awarded based on the creditworthiness of the worst customers since these are most sensitive to financial changes and failures in trade. In these situations, it is important to have a reliable credit system to detect and monitor changes in credit scores at all times.

Keeping your supply chain robust, by assessing and monitoring risks associated with critical providers in terms of financial health and business sustainability is the best way to guarantee a safe and continuous service.

There are some basic measures you can undertake to safeguard your organisation by gaining insight into the financial stability of your clients, suppliers, and other stakeholders before signing any contract.

Obtaining a credit report is the best solution to get a reliable picture of the financial status of any business partner. These reports allow you to easily gain insight into your business partners‘ legal and trading status and the individuals responsible for the relationship as well as maintain up to date invoice and contact details. Most reports include a credit score that summarises an organisation’s viability and forewarns about business risks to aid fully informed decision making.  For this credit bureaus use different weighting systems and statistical methods to consider specific characteristics that impact in the business performance, such as company size, demographics, ownerships, public information records, financial data, industry analysis and county court judgements. They then deliver a global risk score that typically correlates low levels of risk to become insolvent with highly creditworthiness.

Online Business Data Portals

identeco’s Business Support Toolkit provides uncapped access to financial insights on over 4m UK companies and businesses. Subscribers can view real-time financial health ratings and credit scores, access details of trading behaviour and any days sales outstanding, the average time a company takes to settle its invoices, as well as a suggested credit amount. We’ll also flag any detrimental data or existing CCJs.

Unlimited searches and checks are available for an annual fee of just £79.95 per year. The reports are instant and there are lots of other services included making it a highly cost-effective and reliable option for carrying out credit risk checks.

Sign up here or enquire about a free trial.