Continuing on the factors that need to be evaluated when extending credit. Marcadis Singer, PA are debt collection attorneys in Florida, and are providing this intermittent series to assist our clients in formulating their credit policies. A sound credit policy now, minimizes collections, and makes collections more productive later.
6. Check Payment History.
Some of the better business credit reports list payment history. Obviously, the better the customer’s or client’s payment history, the more credit worthy they should be.
7. Are there legal problems looming?
As soon as you see a client in legal problems, filing for bankruptcy protection, liens, anything of that sort, that client should immediately go on COD terms.
8. Are there open Collection Actions?
Good Business Credit Reports will list history of collections and outcomes. This is critical information if you intend to offer Business Credit.
9. Age of customer’s business.
The longer a customer or client has been in business, the more likely they are to weather an economic storm. Certainly age of your business cannot be the only factor, but it is an indicator of your customer’s ability to stick around, and continue in business.
10. Find a credit monitoring service.
If you extend a lot of credit, then your risk is higher, and the return on the expense of a credit monitoring service is warranted. There are several such services out there. Cortera is one of them. Corterea not only monitors credit, but also provides a yelp like setting where creditors can leave comments about their experience with the debtor.
11. No Business Credit? Request Personal Credit Reports
Many businesses simply don’t realized that there is a credit system for commercial businesses, let alone, how to build their business credit. If you can’t find any business references for the customer, request to see their personal credit. Personal credit history is very likely to mirror how the client manages their business finances.