The use of credit reports to check on companies you trade with is an essential tool in managing your business successfully.

 

However, some people would be surprised that many companies regularly check their own company.  There are many reasons why companies do this including:

 

1.         It is vitally important to see how your rating stacks up.  Do you have a good credit score or are you being penalised in some way.

 

2.         If for any reason your credit score is lower than you think, there is no reason why you can’t contact the particular provider of the credit report and ask them for an explanation.

 

3.         As credit reports include considerable information stored at Companies House, it is a useful way of checking that that information is correct.  We know of a number of companies who on checking their director information through a credit report have found that erroneous directors of their company have been appointed.

 

Keep an eye on your own company as the withholding of credit by a supplier because of  a poor credit check can do as much damage to your business as anything else.

A recent survey has shown that only a minority of companies make company credit checks on suppliers and customers in the normal course of business.

Obtaining a credit report on a company has never been easier with a multitude of suppliers providing analysed data online from as little as under £2.

The information available ranges from accounting and statutory information filed at Companies House right through to detailed credit scores and credit checks based on information drawn from a variety of sources.

Whilst credit scores are a subjective measure, sophisticated software systems have now been able to provide much guidance to users of such reports to at least raise alerts and the need for guidance when dealing with specific companies.

In these difficult times, taking out a company credit report on a potential customer is only the start of the process. Apart from ensuring you implement excellent credit control procedures, regular reports should be obtained as a company’s circumstances can change very quickly.

One way of dealing with this is by making use of Companies House monitor service which for a very low cost, provides an alert by email every time a change takes place on the official record. Whilst Companies House offer this for a low cost, you need to have a monthly subscribed account with them and an alternative is by taking advantage of the same service provided by independent service providers.

The annual Barclays late payments report has suggested that there has been a 20% rise in late payments and bad debts written off in the past 12 months have been almost £5bn – that’s £1133 for every small and medium sized business in the UK.

Government figures are showing corporate insolvencies soaring and many experts in the credit and debt collection sector are urging businesses to instigate proper debt collection procedures to ensure survival.

One way many companies achieve this is by constantly making use of the services provided by company credit report websites.  Checking a company’s credit rating online is now affordable and quick.