Why run a credit check on a business?

As a credit manager or finance director, you should ideally be aware of your own business credit score. Not only that, but you should have awareness of the credit score of those that you work with or are looking to work with in the future - be that customers, suppliers or others.

 

A business credit check is your first line of defence when exploring working with anyone new. In this article, we will explain why you should run a credit check on a business and how exactly you can do so.


credit checks on a business

Make informed decisions

Let’s start with the obvious. A business credit check allows you to get a clearer picture of a business’s financial situation and financial history. It gives you access to the information you need to make informed and smart decisions. Can this business meet your needs and pay on time? A business credit check will help you to decide.

 

Identify potential red flags

One of the biggest purposes of a business credit check is to identify and detect any potential red flags. These could include outstanding debts, insolvencies, a history of company County Court Judgments (CCJs), poor financial records and a poor credit history. Basically, anything that could be considered a cause for concern. 

 

For the most part, it’s pretty straightforward to spot when a company might be in obvious distress. It can be trickier to spot those not in an obviously bad place but perhaps on the brink of financial instability. When you enlist the support of a specialist credit reporting agency such as us here at Creditserve, we’ll help you assess the risk and draw conclusions from our business credit reports if you are ever unsure.

 

Protect your business

When running business credit checks, it all comes back to protecting your business. Whether that’s minimising the risk of late payments and unpaid invoices to help protect your business’s cash flow or protecting your business's reputation from becoming associated with the wrong types of business that may not be financially sound or reliable.

 

This might hinder your business’s progress going forward. However, running business credit checks is an ideal way to safeguard your business from these situations, allowing you to avoid financial hazards as much as possible and helping to maintain a healthy cash flow.

 

Avoid untrustworthy businesses

Let’s face it, running a business can be stressful at times. A business owner has a lot of responsibility to handle and potentially a never-ending to-do list. Throw involvement with scams or an untrustworthy or fraudulent business into the mix and those stress levels can be pushed to the max. 

 

A business credit check will help you to determine whether a company is legitimate and safe to go into business with. Knowing that little bit more about a company from the off-set means that you can mitigate the risk of exposing your business to fraud and financial hardship.

 

Avoid debt

Working with untrustworthy businesses can leave you at risk of getting into debt. If a business that you work with goes out of business and they owe you money, it’s unlikely that you’ll get that money back. This can be a real blow to business. 

 

In fact, companies that experience bad debt are three times more likely to go out of business within 12 months than they usually would. Business credit checks help you understand the risk of debt and whether it’s wise to go into business with another company.




When you run a UK company credit check through us here at Creditserve, we pull through the following information for you to review:

 

  • Up-to-date and historic credit limits
  • Up-to-date and historic risk scores
  • Company corporation details
  • Individual directors including other directorships
  • Shareholders and their shareholdings
  • Mortgages and charges
  • Five years’ financial data where available
  • Legal notices
  • County Court Judgment (CCJ) information

 

To get a better idea of what to expect from a company UK credit check, view our sample report.

 

Running a credit check on a business with Creditserve couldn’t be easier. Simply select and purchase your package via our online shop. Whether you just need 50 checks or an unlimited amount of checks, we have a package to suit all requirements. All packages are valid for a 12-month period from the date of purchase.

 

If you can’t find what you’re looking for, just get in touch. We offer bespoke packages and can put together a quotation for exactly what you need. If you’re not quite ready to make a purchase, you can book a free demo of our online credit checking system to see it in action for yourself.



To get in touch and find out more, please give us a call on 01992 414222 or email sales@creditserve.co.uk.