Before you work with a new client, do you run a credit check on them?

We found that 78% of SMEs don’t credit check before bringing on a new client!

We understand, especially as a small business, that time is precious, but the importance of checking new customers shouldn’t be overlooked.  In this article, we will discuss the importance of knowing your customer and how Know-it has all the resources you need in one simple and easy to use platform.   

Understanding the Risks
Before extending credit to a new customer, it’s important to assess the risk associated with the transaction. Without proper due diligence, your company runs the risk of dealing with unreliable or financially unstable businesses that could lead to payment delays or non-payment. This underscores the critical need for comprehensive credit checks as an integral part of the customer onboarding process.

Don’t Skip Credit Checks

By conducting a credit check on a business, you can access their financial stability and creditworthiness.  Through evaluating factors such as payment history, outstanding debts, credit scores and credit limits, your business can gauge the risk of late payments or non-payment and by credit checking, you are basing your decisions on objective data rather than subjective judgements.  Through relying on concrete financial information, your company can evaluate accurately and transparently, reducing any likelihood of entering into agreements with financially risky customers. 

The Power of The Gazette
One valuable resource for conducting customer history checks is The Gazette, which is a trusted source of public record information in the UK. By searching The Gazette’s database, your business can uncover vital details such as bankruptcy filings, insolvency notices, county court judgments (CCJs), and other adverse financial information that may impact a customer’s creditworthiness. Accessing this information empowers your company to make well-informed decisions and avoid potential risks.

Insights from Companies House
Another essential tool is Companies House, the official register of UK companies. Companies House provides a wealth of information on corporate entities, including financial reports, director details, shareholder information, and company accounts. By reviewing this data, your business can gain insights into a customer’s financial health, stability, and track record, enabling them to assess credit risk more effectively.

These checks take time, and in a small business, we know that time is valuable to you.  This is why we created Know-it, to mitigate the risk of working with potential debtors and late payers and automating the full credit control process all in one platform.  We integrate with leading credit reference agency Creditsafe, London, Edinburgh and Belfast Gazette and Companies House.

We also connect with leading accountancy software packages Xero, Sage, QuickBooks and FreeAgent. Connecting your ledger takes a few seconds and instantly you can view all the companies on your ledger, their credit scores and limits for free!

When credit checking in platform each customer will be automatically monitored for 12 months and we will notify you of any changes to their report.

Working with financially stable customers is essential for maintaining a healthy cashflow and sustaining business growth.  By leveraging resources like Creditsafe, The Gazette and Companies House, your company can proactively assess credit risk, protect yourself from potential losses, and cultivate strong, sustainable relationships with creditworthy customers.

Why not connect your ledger for FREE and find out more about your customers!