How to do a Credit Check

Doing a credit check

It' s not recorded on it, and it' s something only you and the credit bureau will know about. What do I do when I check the creditworthiness of a customer? Getting a glimpse of a customer's current situation in the shape of a credit assessment is becoming more and more important. What should a company do with the credit check of clients to decrease the probability that it will have to address outstanding debt? Bridge has authored five best-selling accounts, among them How to Make a Million Before Lunch and How to Make a Start a Business Without Any Money, as well as writing about small and midsize companies for the Telegraph.

Meanwhile, most high-street financial institutions are offering their clients a kind of credit check - Barclays, for example, has a Credit Focus facility, while NatWest offers a Business Status Alerts facility. Credit rating companies such as Equifax or Expertian also provide a variety of opportunities for small companies. Ask for retail reference - call them to see if they pay on schedule.

Not only do you check the creditworthiness of your clients as a single measure - make them an integral part of your company processes, because their conditions can vary and so can their solvency. You can still do deals with them if they fail their credit check or if you have doubts about their solvency - you just have to make sure they paid in advance for every item or every services you sold them.

Keep in mind that a credit check does not mean that a client necessarily pays his invoices on schedule, but merely that he is able to do so. As a result of the recent bank turmoil, credit to fast-growing companies has become really volatile, with the result that credit is difficult to obtain across the board. However, the credit crunch has also made it more difficult for credit to be obtained on a large scale.

The company has grown from a start-up 18 and a half years ago to a sales volume of over 5m, so we are always close to working capital. What's more, we're always close to the bottom line. If we look at clients who want loans from us, we take a truly pro-active attitude, because in the end we need clients. This is how we get to know them, speak to them and get a real feel for the deal and always hunt for delayed payments: As soon as clients miss a time limit, we call them and solve the problem.

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