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10/8/2009 : Lack of credit checks puts business in danger
Research by Absolute Invoice Finance shows that only 27% of UK SMEs credit check new customers, with the other 73% admitting that credit checking was not part of their standard procedure when taking on new customers
This is poor business practice, particularly at the moment with extra pressures on cashflow and increasing levels of business fraud. One large fulfilled but unpaid invoice could have catastrophic results and even lead to the collapse of a business. By not checking a new customer’s credit history companies are putting their businesses at unnecessary risk
Doug Crawford, group managing director at Absolute said: “These figures are concerning. It is never a good idea to take chances with new customers, but it is more important than ever when times are hard to ensure that you are trading with legitimate businesses.
“SMEs should take every opportunity to minimise the risks they face in the current environment, including introducing a policy to credit check every new customer as standard. Legitimate, trustworthy clients will have no reason to question the procedure, and spotting potential problems before taking on new business could make the difference between survival and failure.”
Credit Guardian is a powerful yet cost effective solution to the issue of checking the credit situation of your customers and suppliers - use this link to find out more
