Why You Should Credit Check a Potential Customer
In a perfect world, everything about business would run smoothly. Deliveries would never be late, profits would be through the roof and, most importantly, payments would never be late. Unfortunately, this is not a perfect world and late payments are a very real and serious issue for a lot of businesses, particularly in the current economic climate that we are experiencing. The first step to resolving the late payment problem is to set up a system where a credit check is performed on each potential new customer.
The first thing you should consider is which credit check agency is right for your business. More often than not, this can simply come down to a matter of price as a lot of companies tend to have very similar, if not the same information. You should consider the cost of performing the credit check and weigh it up against the new customers potential value. For instance, paying £4.50 for a tele-credit check with Creditsure for a customer who could spend £200,000 would be considered a wise investment.
When using a credit check agency, you will be told if the customer has any CCJ’s registered against them, or if they are trying to obtain credit while insolvent or in administration and will thus try to avoid payment for your goods or services. By performing credit checks you can prevent bad debts from occuring and as a result eliminate the need for a debt collection agency or a debt recovery company to be called in to collect an overdue account.
Remember, prevention is the best cure and the cost of a few pounds could save your business thousands in the long run.