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Company credit checks to streamline your due diligence

Capitalise Aug 01, 2023

It’s important for your business to make informed decisions when it comes to partnerships, investments, and extending credit. Conducting due diligence is a vital step to assess the financial health and credibility of potential partners or clients. 

By running company credit checks, you can streamline the due diligence process, to help your business make informed decisions, while minimising risks.

What are Company Credit Checks?

A company credit check allows you to view the credit profile of another business, providing an evaluation of their financial health and creditworthiness. By running a company credit check, you can view key information such as their business credit scores, any legal notices, such as a CCJ, and payment performance, allowing for valuable insights into the financial stability and reliability of your existing partners, potential partners or customers.


How company credit checks help your business 

Efficient due diligence is essential for mitigating risks and protecting your business interests. Company credit checks can simplify your due diligence process in a few ways: 


Identifying risks to your business’ reputation 

Company credit checks can reveal any legal notices such as CCJs, or Gazette Notices, that can signal another business is in financial difficulty or may be going insolvent. Identifying these concerning legal notices early on helps businesses avoid potentially damaging partnerships and reduce the risk of financial losses.


Enhanced decision-making

Company credit checks provide an objective assessment of a business's creditworthiness. Armed with this information, your business can make well-informed decisions regarding credit limits, contract terms, and the overall viability of potential collaborations. This empowers your business to negotiate favourable agreements and protect their financial interests.


Protect your business’ cashflow 

Late or non-payment can significantly impact cashflow and profitability for your business. By conducting credit checks, you can see the likelihood of being paid on time. This proactive approach reduces the risk of late payments to ensure a healthy cashflow.


Strengthen supplier relationships

Credit checks aren't limited to potential clients but can also be used to assess the creditworthiness of suppliers. Understanding the financial stability of suppliers helps your business to choose reliable partners and minimise disruptions in your supply chain. This leads to stronger relationships, increased trust, and a more resilient business. 


Avoid bad debts

Unpaid debts can severely affect a company's cashflow, profitability, and overall stability. Regularly checking for CCJs helps businesses steer clear of unreliable customers and minimise the chances of incurring bad debt.


Debt collection and legal action

If a CCJ has been issued against one of your debtors, it could be an indicator that they are already involved in legal proceedings or facing insolvency. Being aware of this beforehand allows your business to take appropriate legal action. 

Top tip: When a business goes insolvent, claiming bad debts is typically done on a first come, first serve basis. If one of your debtors starts insolvency, you should start legal proceedings as soon as possible. With Capitalise for Business, you can receive instant alerts on any CCJs or legal notices registered, to help you act as soon as possible. 


When you work with other businesses, streamlining your due diligence with company credit checks can play an essential role in your business’ sustainable growth and risk management. 
Get started with company credit checks.

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