When doing business on a face to face basis, the sales pitch will arise and you could be bombarded by promotional tools from the company who is trying to sell you their business. Before you know it, you’ve signed on the dotted line and you’re tied into a contract with them. Most companies will show you the top end of their business, the part they have prepared especially for new business and many will hide the bottom under the surface. It is rare businesses are completely transparent; however by credit checking them you can avoid not being told the whole story by a company. A company’s legal documents are publicly accessible; however Creditsafe amalgamates all the information from various sources plus wholly owned data into one easy to use company credit report which is instantly available online. The information is broken down into tabs and we pride ourselves on ease of use. Don’t go into business with a company only knowing half the picture, credit check them before signing any contracts and uncover the whole situation.
Here are five things you could find in a Creditsafe company credit report that a business could potentially try to hide from you, be prepared when going into business and always credit check potential customers.
If a company is not very good at paying, it will show in their payment trend. A company credit report will show you a company’s average Days Beyond Terms (DBT) it takes for them to pay their invoices. It also gives you the industry average DBT, so you can compare the company against their industry average and see whether they are good or bad payers. A company won’t tell you they are bad at paying, but their company credit report will.
A key part of our credit reports is allowing you to see all director and shareholder details, including any previous and current directorships. You can check if they have had numerous failed businesses beforehand or if they are a director of ten companies and could be over stretching themselves. Don’t always judge a director at face value; it’s always best to double check their history and any other involvements in any other companies. Be on the lookout for any failed companies or bad history connected to them and always be vigilant when checking.
CCJ Information and bad debt
Always check a company’s debt status, and if they have any County Court Judgments (CCJ’s). CCJ’s are when they have been taken to court in a dispute over money, so this could be an indication that they have been bad payers in the past, however not necessarily. They may have had an awkward customer, or they may have got into a contract battle over money. Just because they have a CCJ it doesn’t mean they should be written off as bad payers. If they have a stack of CCJ’s in a short period of time, then it may be worth looking deeper into this company and their payment behaviour. Another thing to check is how much debt they have. Every company will have debt, and most businesses manage them effectively. Not all debt is bad debt but if they have numerous mortgages and more money going out than it is coming in, it may be worth thinking where your payment would come into this chain if they become a customer of yours, and if they did get into trouble when are you likely to get paid?
A key financials tab gives you an insight into the company’s finances and how well they are handling their money. On our credit reports we also give you a percentage dial to show you if the figures are worsening or improving. A company might tell you that they are improving and growing year on year and their financials are completely secure, but double check for yourself. Sometimes staff aren’t even aware of a bad financial situation, so it’s best to check the figures that are in black and white on a credit report.
By checking out a company’s group structure you are seeing all the connections they have worldwide. A company may use a bigger brands name if they are connected to them to boost their presence in the market, however if they are connected to a company or brand that has been slammed in the media or has a bad reputation in that market they may try to hide the fact they are connected. A credit report will tell you worldwide group structure of that company.
Always credit check before going into business with a company, there are more Iceberg companies out there than you realise!