How to check for CCJs
You may want to check for CCJs if you’re looking to lend money to a business owner as part of your due diligence in ensuring that you’ll receive your money in time and to minimise as much risk as possible.
Here, we’ll take a look at how to check for CCJs, including what to do if a CCJ is found and how to protect yourself from the financial risk that comes with this.
What is a CCJ?
A CCJ - or County Court Judgment - is a court order that is issued when a company or individual is unable to repay money they owe. So, if the person you have lent money to fails to pay you back, you’re able to take them to court. If the court confirms that debt is owed, they will be issued a CCJ, which legally requires them to pay it back.
CCJs will severely impact a company’s credit rating and financial credibility, and can stay on a company’s credit report for 6 years. However, if you pay the full amount back within a month, the CCJ will be removed from your credit report. Companies can then apply for a certificate from the court stating that the money has been paid back in full.
If the company can prove to the court that they never owed the money in the first place, they can apply for the CCJ to be removed from their file.
Who needs to check for CCJs?
There are many different types of individuals or companies that will need to check for CCJs, for example:
- Business owners and directors before entering into contracts, partnerships, or long-term agreements and to assess a supplier’s or customer’s financial reliability.
- Credit controllers and finance teams when deciding whether to offer trade credit or set credit limits for new customers or as part of due diligence checks for risk management purposes.
- Lenders and investors evaluate a company or individual’s financial history before lending money or investing.
- Suppliers and wholesalers before agreeing to deliver goods or services on credit to avoid any payment issues down the line.
- Landlords and letting agents when vetting potential tenants, especially business tenants for commercial properties.
- Job seekers or contractors who may want to check on a potential employer or client before accepting a role or freelance contract, especially if invoicing is involved.
- Consumers before making a large purchase from a company (e.g. home renovations, vehicles) to avoid losing money to financially unstable businesses.
Why check for CCJs?
Checking whether a company has a CCJ before lending out money is imperative to safeguarding your company against financial risk. It will help you establish a company’s financial reliability before extending credit and entering into a contract with them, reducing the risk of late payments, defaults or financial loss.
Step-by-step: How to check for a CCJ
As a lender, you’ll be able to check if a company has a CCJ by accessing the public register of judgments, orders and fines maintained by the Registry Trust Limited. All you need to do is provide them with the company name or registration number, and you’ll be able to access the information you need.
Alternatively, you can check to see if a company has a CCJ by reviewing credit reports from credit referencing agencies, like us at Creditserve. By using our UK Company Credit Check service, which gives you access to our Bronze, Silver and Gold packages.
Our reports will include CCJ information alongside credit ratings and the payment history of a company. You can also check Companies House filings for related financial red flags (though CCJs are not directly listed)
What to do if you find a CCJ
So, what do you do if you’ve checked for a CCJ and have found one? The first step to take is to evaluate how many CCJs there are and the amount of money outstanding for each one (if there are multiple). Also, check the date to see when the CCJ was issued; an older CCJ may have already been settled and is of less concern than a more recent one.
If you are still worried about finding a CCJ with a potential company or client you would like to work with, you can always contact the company and allow them to explain the situation to you to offer you some reassurance.
How to protect yourself from financial risk
Checking for CCJs is a good step to take in order to protect yourself from financial risk. But there are also other ways of being able to protect yourself, for example, by:
Running credit checks on new suppliers or customers regularly
As we’ve mentioned before, running credit checks on new suppliers or customers regularly is a great way to keep on top of any financial risks that may arise. Check for CCJs, a poor payment history or low credit scores.
So, make sure that you continue to run credit checks on your customers to keep on top of any new financial information that could pose a risk to your business.
Setting credit limits and payment terms based on financial health
Make sure that your payment terms are clear from the outset so that your debtors are aware of their financial obligations to your company. Be sure to include any details on late payment fees and interest rates, and that both parties agree to these terms in writing.
Considering trade references or upfront payments for high-risk entities
If you feel that the company you’re potentially going to be working with is high risk, you can request a trade reference where the business provides you with details of other suppliers they’ve worked with before.
Once you have these details, you can then ask questions like ‘Have they paid on time?’, ‘Were there any disputes?’ or ‘Would your company work with them again?’. This will help you gauge how reliable the business is before entering into an agreement.
So, make sure that you check for any CCJs a company may have to get the best out of a financial agreement with them.
Creditserve offers a range of credit check packages that will help you run credit checks on any company you work with. With our services, you’ll be able to assess the risk efficiently, making informed decisions that allow you to mitigate financial risks.
Contact us at 01992 414222 for more information!
