Company credit checks are a valuable tool in your (and your company’s) quest to do smart business. How? Well put simply they help you assess crucial business contacts such as your company’s suppliers and clients.
When starting up it’s all too easy to accept what you can get. This supplier can provide a service far cheaper than anyone else – great, let’s go with them. This client wants a service from us for 18 months – brilliant, let’s sign them up.
Now of course this all makes sense. What business owner in their right mind is going to turn away a great deal from a supplier or refuse a long-term contract with a customer?
However, if you a business owner, not only do you have a business to protect (and hopefully grow), you may also be responsible for the wellbeing of a number of people. Because of this, you should always err on the side of caution. If something sounds too good to be true, there’s no harm in doing your due-diligence. This is where a company credit check can help you.
A company credit check is the act of searching for a company online, through a company search provider with the aim of getting company information, and in particular company accounts information.
This company information is taken from a number of places including company credit check agencies and a Companies House check (sometimes erroneously referred to as a Company House check). The information is provided in the form of a company credit report that can normally be downloaded from an online account or emailed as a PDF (but the exact delivery method will depend on the company credit check provider).
So how can a company check help you assess your suppliers?
It’s all to do with the company information:
- General information
- Company name
- Company number
- Registered office address
- Standard industry classification (SIC) code
- Incorporation date
- Website address
- Confirmation statement made-up-to date
- Annual accounts made-up-to date
Credit risk overview-
- Credit risk score
- Credit limit
- County court judgments
- Net worth
- Total liabilities
- Net assets
- Key financials
- Balance sheet
- Salaries and dividends
- Cash flow
- Capital reserves
On its own – this is just company information. What you then need to do is analyse the information that relevant to you and your business – which in most cases is the company accounts information and the credit risk information. It’s also a good idea to look at the personnel involved in the company – these being the directors, shareholders and secretaries (if the company has appointed any). By doing this you can get an idea of the success / failure rate of the companies that the individuals have been been involved with.
If all this information is analyzed correctly, you can then assess the risk factor in getting involved in a particular company – giving you an indication on whether you should, or indeed shouldn’t, take on the business as a supplier, client or partner.