Commercial credit checking is becoming commonplace in today’s fast-paced business environment. Although the economy is in recovery and on the upswing, uncertain times lie ahead with the tumultuous Presidential election still fresh in our memories and the full impact of the Brexit decision having not yet been realized. Keeping your business safe has now become more crucial than ever, and regularly checking business credit is a key component of your company’s financial stability. Despite the fact that checking your customers and suppliers is now considered routine best practice, there are still some holdouts that rely on reputation and a handshake for their credit management process. Now, this reluctance may be the result of not knowing enough information about business credit checking or thinking business credit checking is too expensive. While individual circumstances may be different, following are the top 5 reasons we’ve encountered for businesses not incorporating business credit checking into their standard credit control practices.
I only deal with large, established businesses
This is a common misconception; the truth of the matter is no business is too big to fail. Remember Enron, Sports Authority, or Kodak—just to rattle off a few. No business is ever 100% secure, and despite their reputation or longevity a business can fail due to poor leadership, taking on too much debt, and failing to keep up with technology or the whims of the market. In some cases, it’s not the company you’re dealing with that fails, but rather a parent or sister company—this could cause harm down the road for you, your customers, or suppliers. With a product like Creditsafe, you can see the whole picture.
They have always paid me on time in the past
Trust can be a tricky issue in business. If a company has an established history with you and has always paid you on time, then there’s no reason to think this won’t continue—until it doesn’t. Each business will experience up and down cycles, and if a business is in a downturn one of the first things affected is the time it takes to pay their bills. A late payment, or non-payment, from a large customer could have a ruinous impact on your cash flow. Running a credit check, or monitoring your key customers or vendors, is not about a lack of trust, but rather about safeguarding your business. Creditsafe’s credit reports contain the vital information you need to make the right choices for your company including a business’s payment trends, an overall credit score, possible links to other companies, and much more.
The CEO seems experienced and capable
As I’ve mentioned before, trust is a thorny issue in business. Rather than blind trust—and let me co-opt a phrase from a former US President—a business should trust but verify. Some executives may be completely forthright and candid about their past, but some who are less scrupulous could be concealing a string of previous business failures. If the executive you’re dealing with has a past littered with failed companies, wouldn’t you like to know? Our officer search can show you a CEO’s past and present roles, as well as provide information on those companies.
I credit checked them once, why would I do it again?
Circumstances change. As much as we like the comfort of consistency, in life and business things can change in an instant. With the business world moving at quicker speeds and being more connected than ever before, change can take place in a heartbeat regardless of the size of a company. Within the span of a fiscal quarter, a company can go from being creditworthy to the brink of insolvency, which is why we recommend ongoing monitoring of your customers and vendors. Risk Tracker will actively monitor your suppliers and customers and alerts you of any change in their credit rating or payment behavior—this way you can take quick action if warranted.
If they don’t pay, I can just take them to court
Besides the expense of taking a customer to court over an unpaid invoice, the process can be time consuming and stressful. If you pursue litigation, it could be weeks or months before a court date is set—all the while you are incurring legal fees to prepare your case. Here, an ounce of prevention through using our risk tracker is certainly preferable to the cure of a lawsuit. But, in the instance you find yourself chasing down a bad debt, Creditsafe can help through our debt collection partnerships. Our partners provide their services on ‘no win-no fee’ terms—so if they don’t collect, you don’t owe. Now, that’s the closest you’ll come to a win-win solution when chasing down a debt.