In a world that lives on credit, it can be a huge advantage for a business to offer credit terms to their clients. Extending credit can be a brilliant way to earn customer loyalty. But It can be difficult to know which customers are worthy of credit, customers who need credit can also easily become customers who never pay their bills.

Here are some tips on things you can do to decide if you should be extending credit to your clients and how much credit to give them.

Get a credit check

A basic credit report can be acquired through Credit Safe, Experian or Equifax. The report will give you a company’s credit score and some essential numbers you can use as a benchmark of whether the customer is creditworthy as well as reveal any previous bankruptcies, insolvencies county court judgements, and any accounts that are overdue.

Do your research

Check out your client’s business address, if it is close by then visit the site in person or take a look at Google maps and scope out the building. Are your client’s contact details and online platform up to date? This will give you an indication of how active the company is. If their phone lines are down, then you may want to question how they do any business. There may be a reason for this out of date information, but it should start to ring some alarm bells.

Check References

Speak to suppliers and find out if your client pays on time. Also, try to learn the terms of those invoices; for instance, are they used to paying within 30 or 60-day terms? This will give you a sense of whether they are accustomed to paying promptly within their terms.

If your company has never offered credit clients, you should definitely start slowly. Give yourself some time to understand how your cash flow will work and be prepared to deal with possible cash shortages. Swift Resolution offers a more detailed review and thorough credit check on new and existing commercial customers so you can make informed decisions when giving credit. Get in touch on 0808 145 1886 or email enquiries@swift-resolution.com