Only give credit where it’s due

Posted: 29th September 2011

Leading global information services company Experian has published the results of a survey on credit awareness amongst small businesses in the UK.

71 per cent of the 700 small businesses surveyed failed to check their customers’ credit status, 39 per cent did not know what a credit score was and 61 per cent had never checked their own credit score.
Credit scores provide an assessment of a business’s financial health. A low score could mean that a business is more likely to fail although, according to Experian, for many small businesses a low score can stem from a lack of detailed data about the business or a failure to file complete or accurate information, rather than any underlying financial insecurity.
A low credit score can affect a business’s ability to access finance or attract new customers, and can also result in suppliers imposing stricter trading agreements. It is therefore important to treat requests for information seriously and to ensure that statutory filing dates (e.g. for accounts) have been met.
Doing business on credit terms without having any knowledge of the customer’s financial status exposes your business to a greater risk of being paid late or not being paid at all.
For help in drafting trading terms that offer protection to your business or in obtaining payment from uncooperative debtors, contact us.