Are Your Customers Creditworthy?

February 2006

Small businesses should check potential customers’ creditworthiness before starting to trade with them and then continue to monitor them to avoid payment problems developing, advises the Better Payment Practice Group (BPPG).

An effective way of doing this is to apply for a status report on the customer from a credit agency. These include full customer details and financial results, along with the payment experience of other suppliers, county court judgments registered against them and a recommended credit rating.

The BPPG recommend carrying out credit checks on customers that make up the top 80% of your sales. These businesses should be given a full credit check. Less detailed checks can then be carried out on the others.

The BPPG also offer advice on whether or not you should offer customers trade credit in the first place and give tips on how to improve the credit rating of your own businesses.

Internet link:

To read the BPPG guidance go to:
BPPG guidance

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