One-off approach to financial checks must stop

 

There is a growing recognition that the results given by credit ratings agencies can differ quite significantly from agency to agency. This is increasingly of concern to many businesses – and certainly those who are considering using a supplier, or providing goods or services to clients, based on financial checks they have had conducted on their behalf.

There can be serious consequences of working with clients or suppliers whose credit rating appears to be sound, but turns out not to be. Obtaining goods from suppliers that could be in danger of going bust, for instance, could result in a business having to let a customer down if those goods were to not be available. This could be of real business detriment dependent on the situation – particularly if the goods or services being supplied are business-critical.

Similarly, working with a customer whose financial position is precarious poses an obvious threat to being paid for the work, goods or services. Even delays in payment can be detrimental to a business relying on that income.

Whilst credit rating facilities are widely available and can provide an idea of the financial status of a business and its directors, since the results can vary between agencies this may not always be 100 per cent accurate. On top of that, a business may carry out a credit rating check on a customer or supplier which may show a favourable picture, but there may be underlying financial issues of that business which may not show up on a credit check, but could spell problems for the future.

We advise clients who are about to start working with new customers or suppliers to carry out financial checks which can negate costly mistakes. This is why we developed our Business Protect service. It not only provides all the necessary financial checks required to ascertain whether there are any debts or underlying financial issues, but it can provide real-time information on an on-going basis, so if a customer or supplier was heading for a financial crisis, the Business Protect solution will highlight this.

Many businesses take a one-off approach to credit checks, not really considering whether a company they are dealing with is heading for a fall – and taking on face value that a credit check highlighting that everything is sound today means it will be in the future. In today’s economic climate it is more pertinent to make a continual commitment to financial checks for ongoing peace of mind and avoidance of costly mistakes.

For more information about how Business Protect might help your business, call Tessa on 01827 54944 today.