The business world is an array of different shades of grey. Gone are the black and white days of doing business and it’s getting harder to uncover the mask that some directors hide their companies behind. Credit checking is fast becoming built into the DNA of many businesses, and it’s advised you always stay fully protected when venturing out on new adventures. It’s now common practice to be cautious when dealing with someone new, as fraud is one of the biggest crimes in the UK and the Creditsafe product suite offer tools to combat any misconduct. Our credit reporting facility is built to give you a company’s information instantly online, all in one place. They can then aid you in making a decision on whether or not to do business with that company. Every business is different. They will have different products, different financials and different ways of dealing with things. They could even be hiding dark secrets.
So as the business world blurs into different shades of grey, make sure you don’t get tied up in bad dealings and follow these top five tips to look out for when investigating a new business relationship.
- Know who you’re getting into bed with.
On a Creditsafe credit report, we offer all director details, such as full name, date of birth, and address. We also offer all their previous and current directorships, letting you see if they are hiding any failed companies or are running other companies other than the one you are dealing with.
- Remove the blind fold.
Check a company’s credit score. A credit score is like a first impression on a Creditsafe credit report. It’s a snapshot of what is going on behind the scenes, and takes all information into account to give a company a score of between 0-100. The higher the score, the lower the risk that company is. So even if you can’t understand all the financials and figures, a quick look at this will give you a basic idea if the company is any good or not. Don’t be blind to an uncreditworthy company.
- Hard and soft limits.
Another thing to check is their credit limit. A credit limit is how much we recommend a company can be invoiced at one given time. Smaller companies will have a smaller credit limit than bigger companies, and that is worth noting if you do come across a low credit limit. However, if it’s extremely low or cash only, it may be a warning that they can’t afford to pay high amounts of money back. Creditsafe are approved by all major credit insurers and take various amounts of information into account and offer these limits knowing what a company’s payment behaviour is like. Work out what is a soft and hard limit for you, and if the chance of not being paid is a hard limit, stay away from companies with a very low credit limit.
- A sordid past?
You wouldn’t get into a relationship with someone if you knew they had treated lots of people badly in the past. The same goes with business. If they have failed to honour agreements and pay on time in the past, their Days Beyond Terms (DBT) could be high and their payment trend will change on a Creditsafe credit report. Our payment trend feature also shows you if they are getting better at paying, staying the same or worsening. Watch out for these key clues on how to determine a company’s payment behaviour.
- Look for misdemeanours
By checking for County Court Judgments (CCJ) on a company’s credit report you can check if they have ever been taken to court over unpaid bills. Even if they are able to hide disputes with companies in the past, they won’t be able to hide legal battles. Always check for these before entering into a new business relationship to protect your own cash flow.