What is a credit report?
To begin with, a brief introduction is in order. A credit report is used in order to check a company’s creditworthiness. These reports are provided by a range of credit reference agencies, including companies such as D&B and Creditsafe. They look at a company’s financial statements, payment record, liquidity, suspicious events in the past and even at affiliated businesses. Subsequently all this information is used to determine a credit score, which will enable you as an entrepreneur to make a proper assessment of your business partner’s creditworthiness and reliability.
- Non-payment major cause of bankruptcies
Non-payment is one of the principal causes of bankruptcy. If you as a company receive a large order from an unknown customer, this seems too good to be true. Often this is indeed the case. All the same, the temptation is too great not to facilitate the customer. At such moments, it is advisable to request a credit report on the customer in question. This will help you assess your customer’s willingness to pay and close the deal with confidence.
- Small investment, high return
You can purchase a credit report from as little as $12.95. Compared to the risk you run if a large order remains unpaid, this is a relatively small amount. Generally speaking, most customers pay their invoices in time, but that one time when you do not receive your money should be reason enough for checking your unknown customers in the future.
- Focus on your own activities
You probably recognize the situation. That one customer that you had to keep ringing for weeks in order to receive the money to which you are entitled. It is not a job many people enjoy, because it takes time they cannot spend on their normal activities. If you perform a prior check, the credit report will tell you about your customer’s payment practices: do they always pay within the agreed payment term, or do they tend to take just a few weeks longer? This is useful information, which you can then take into account. In this way, you will spend less time on chasing up your debtors and more on your normal activities.
Order a credit report or take a look at a sample report.