Credit and Finance, News and Insight
How much do you really know about your customers and suppliers?
Posted on by Cindy Yip
Estimated read time: 3 mins
Collaboration with customers and suppliers can bring many benefits to your business. Building relationships can give your business a competitive edge. Before working with them, how much information do you try to find out? Commercial credit reports can help you to gain a greater understanding of the businesses you work with.
Firstly, what is a commercial credit report?
At some point you are probably going to check your personal credit report, when applying for a credit card, loan or mortgage. A commercial credit report works in a similar way, using your company information rather than personal.
A commercial credit report includes information such as:
- Your company’s credit score, limit and rating
- Repayment histories with lenders and suppliers
- Legal filings such as judgments and bankruptcies
- The history of the directors involved.
When deciding to extend credit to another business, a commercial credit report may be one of the most powerful tools you could have in hand. It’s objective, unbiased and timely.
Next, why is it important to check other businesses?
A credit report could form the basis for decisions that you make. It indicates a business’ creditworthiness and their ability to meet financial commitments. A positive credit score can give you the confidence you need to build a relationship.
Specifically, what is the benefit of credit checking your customers?
Time and time again, you have heard cash flow is the lifeblood of a business. Ensuring customers pay you on time is vital to maintaining a healthy cash flow. It is important to know if they are able to make timely payments before working with them. Credit reports are the best way to check if a prospective customer is a good or bad credit decision.
Then, there are your suppliers
Suppliers may only share information that casts them in a good light. By looking at their credit score, you will be able to see their current financial status and stability. Also, look at their payment performance; a trail of timely payments could indicate their business is in good shape.
All in all, credit reports are a powerful and cost-effective tool to assess the risk of working with other businesses. Taking ten minutes out before entering new business relations, for due diligence checks, could be a great investment.
This is where we can help. Experian for SME offers quick and easy tools to help protect your business. Understand your own business credit profile or credit check other companies to get peace of mind. Be informed and gain a deeper insight to help you make decisions with confidence. Click here to find a package that’s right for you.
Are you looking to minimise your business’ exposure to bad debt and make informed business decisions every day? Qualify your customers, suppliers or contractors with Experian UK Business Credit Reports. Speak to one of our agents today to claim your free trial.