Identifying Customers In Financial Trouble

When a potential borrower approaches you with a draft credit application, you shouldn’t say “yes” straightaway. During the economic recession you can’t skip checking the creditworthiness of the people you haven’t dealt with before. To identify companies in financial trouble, you can follow strict procedures which in some cases turn to be too time consuming. With director reports you can make the right decision quicker.

Taking financial risks is part of any business. If your company extends credits to other companies, it’s crucial to minimise financial risks. In the unstable economic conditions you can’t rely entirely on the knowledge that your borrower-to-be has been in business for years. Long presence in the market isn’t always a synonym of creditworthiness. Those who push credit applications through without checking applicants’ financial history might be making a big mistake. Regular payments made during the first months might gradually get outside agreed payment terms so slow-paying customers should be identified as soon as possible.

Thorough director reports can provide an insight into your potential customer’s business history. With nearly 9.3 million live directorships covering 2.5 million companies you can find the necessary report within a few clicks of a mouse. Reports offered by reputable reference agencies boast of the highest accuracy – 99.6%; the data is constantly verified and updated. All reports have been compiled in accordance with the existing regulations for data analysis and compilation. Typical reports on company administration contain the following sections: personal details, report summary, live directorships of trading and non-trading companies, directorships of dissolved companies, directorships of companies with insolvency proceedings and resigned directorships. Standard director reports can provide a rather detailed summary on one’s business activity.

Reports can be ordered online and you get access straightaway after completing the payment procedure. However, you may want to take additional steps to ensure that a potential customer can’t turn into a slow-paying one. You can start with a simple procedure: ask a customer-to-be to complete their credit application with additional information such as name, address contact information, main company executives, etc. Make sure an application form has a field where your borrower needs to indicate the amount of credit they are applying for. Next step is to verify the information provided. You can compare it with the information from director reports you’ve ordered from a reference agency. If there are any discrepancies, ask a customer to confirm their data. A credit report can provide more financial information which may help assess how soon a borrower can pay the credit.

Providing credit to new customers is always risky but there are steps to minimise financial risks. Rigorous checking procedures coupled with comprehensive director and credit reports may help you identify slow-paying customers quicker.