Today, due diligence is vital in whatever business you conduct, especially for the B2B sector. Late payments are becoming the plague to avoid and massive amounts of bad debts are being written off every year, therefore it is becoming even more vital to know who you are dealing with. As a business solutions company, Creditsafe will always advise you to credit check your potential customers beforehand to make sure they are creditworthy enough to work with. A Creditsafe company credit report can show you key financial information, director information, trade payment data and any adverse CCJ information. Credit checking is made easy with our simple reports, and you can make sound informed decisions knowing that you have done your due diligence correctly.
However one major point that not enough businesses practice, is monitoring. Once the initial credit check has been completed, you have found a company to be creditworthy and contracts have been signed, many companies think that everything is sorted and they will have a blossoming working relationship. However circumstances can, and often do change. Unfortunately credit reports aren’t stagnant, they change on a regular basis and a company that was creditworthy 6 months ago may not be creditworthy now so it is vital to monitor your customers throughout the duration of your contract with them.
So why is monitoring so important?
On a Creditsafe credit report, credit ratings and limits change in correlation with a company’s behaviour. For example, if a company’s financial data or payment performance changes, so will their rating. Our scoring model looks at directors and any company failures associated with them; if they have a history of failed companies this will be taken into account when giving the company a rating. If a company gets issued a County Court Judgment it’s a sign of bad debt and can be an indicator of the company struggling financially so their rating would also drop then. We take into account industry analysis as some industries have greater risks than others, this criteria is used to give an accurate credit rating to a company in order to help people who are thinking of dealing with them get a clear picture of different elements of the company and not just what’s on their figure sheet. So if you are monitoring a company and their credit rating drops, we know something has gone wrong somewhere. Unless you were monitoring this company, you may never have found out about these changes and could have put your company at risk.
A live feed of company information will update a company’s credit report on a daily basis and Creditsafe’s Risk Tracker automatically notifies you if anything on your selected companies’ credit reports changes, keeping you constantly updated and able to make quick decisions in terms of your offerings to your customers. For example, if you have a customer with an outstanding debt and their credit report drops to uncreditworthy, you know to chase payment before they get late on paying their bills or worse, become insolvent. You can customise your Risk Tracker emails for what you want to be notified on. There are over ten variables to choose from such as a change in credit rating, credit limit, company status change, address details, senior executive change, CCJ status, plus more.
Monitoring can help you spot the warning signs of a failing company, so it’s always best to see them and act as quickly as you can to protect your business, as when a company becomes insolvent there isn’t a lot you can do about it afterwards.
Monitoring your suppliers is also a vital point of business which again can be over looked. Especially if your company is product based; making sure your suppliers are creditworthy is very important. Many people think that credit checking is all about making sure they are going to get paid, but if your supplier becomes insolvent, you won’t get any products to sell. It’s worth monitoring them to make sure you will continue to be supplied with what you are paying them for, if they become insolvent you could lose a lot of money if you are continuing to place orders that they can’t complete.
When you’re running company searches, Creditsafe also offer safe alerts to help combat fraudulent activity. Safe alerts can flash up on searches if:
• There is a disqualified director attached to the company credit report, or a director failure. This ensures you are aware of a director’s history before dealing with this company.
• A company has filed an excessive turnover, for example a start-up filing a 3 million turnover in their first year could be seen as suspicious.
• There are other companies who have filed the exact same accounts as the company you have searched for.
• There have been multiple changes on the board in the previous 6 months this could also cause suspicion.
It’s important to note that these are just alerts for our customers to be cautious; they are there to make you aware of possible fraudulent activity.
Creditsafe not only helps your business conduct its necessary due diligence on a new business opportunity, we also help you stay protected throughout your business relationships. By ensuring you are monitoring customers you are always staying ahead of the game.
To get a free trial of Risk Tracker, please click here.