Credit checking is still essential

With the economy continuing to improve and pressure being put on small businesses to increase sales as interest rates rise, it's important to remember the value of obtaining credit checks. After experiencing lower demand in the last two years, businesses are eager to close every sale opportunity they come across, often at the expense of making a credit check or even adhering to their business credit policy.

Improving economy aside, many small to medium enterprises are under cash flow pressure as debtors default on payments as they become insolvent. Although many SMEs are simultaneously seeking to increase cash flow through sales, it's also important to confirm the ability of existing and prospective customers to pay.

This is borne out by the results of the latest business-to-business trade payments figures released by Dun & Bradstreet this week. An examination of more than 9 million current account receivables on the Dun & Bradstreet found that reveal that payment terms in the March 2010 quarter rose to 54.1 days. Although this is an improvement from the Q1 2009 figure of 57.4 days at the height of the Global Financial Crisis, it is still 55 per cent above the standard payment terms of 30 days.

Read the latest Trade Payment figures here

An average delay of 14 days on standard payment terms can cause much hardship for SMEs who may be trying to juggle delays in payments against increased costs associated with improving levels of business activity. This is even before taking in to account customers who default on payments.

A simple credit check with a company like Dun & Bradstreet can ensure that businesses have all the information at their fingertips to make an informed decision as to whether they should offer a customer credit as well as how much credit and on what terms.

Increasingly customers are expecting businesses to make a decision on offering credit at short notice and with a limited amount of information on which to base the decision. Dun & Bradstreet offers a number of credit checks which can provide small businesses with information on which to make credit decisions.

D&B Report - recommended for medium to high-risk decisions.
D&B's most insightful report providing everything you need from identification details through to financial stability and payment predictors. A D&B Report provides analysis on a company's long-term operations, credit history, profitability and stability.

Business / Company Check - recommended for medium-risk decisions.
This credit report includes D&B's Dynamic Delinquency Score (DDS), a powerful payment predictor. In addition to identification data and company characteristics this report provides you with an insight into payment patterns: will you get paid on time?

ASIC Historical Extract -recommended for company ID and past events.
Provides real-time access to ASIC data allowing you to confirm an entity exists and is operational. Also provides historical data such as previous company names, directors and addresses allowing you to track previous structure and characteristics.

ASIC Company Extract -recommended for company identification.
Provides real-time access to current ASIC data allowing you to confirm an entity exists and is operational.

 Business Name Extract - recommended for business and owners verification
Provides verification of the business proprietors and the business establishment date. Also provides business type, registration details, current registration status and any documents that have been lodged against the business.                                                                                

FREE Company Search -recommended for business verification
Company Search is a free service that provide real-time access to current ASIC data enabling you to check the registered details of any business. It provides ABN, ACN, ARBN, and current registration status of any Australian business entity.

The cost of knowing a customer's credit history will never exceed the impact that can potentially be caused by making poor credit decisions. Irrespective of how quickly the economy is moving every business should take the time to reduce their credit risk.

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