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How credit checking can impact your business relationships

Capitalise Aug 22, 2023

Building and maintaining strong relationships with customers, suppliers, and partners will be essential for a business’ growth and sustainability. 

Company credit checks help to understand the financial health and reliability of potential and existing business associates by seeing their business credit profile and creditworthiness. 

In this blog, we explore how credit checking can significantly impact your business relationships and why it should be an integral part of your credit control and decision making process.

Establishing trust and credibility

When initiating new business partnerships or dealing with clients, trust and credibility are essential. Company credit checks provide valuable insights into the financial history and payment behaviour of your prospective partners. By verifying their creditworthiness, you can better assess the risks associated with the collaboration and make informed decisions. A good business credit score indicates a reliable track record of fulfilling financial obligations, laying the foundation for a more trustworthy business relationship.


Managing risk effectively

Understanding the financial stability of your partners, customers and suppliers is crucial to managing risks effectively. Having a credit control process ensures that you are aware of such risks and helps to reduce them.
By running company credit checks, you can reveal potential red flags such as late payments, outstanding debts, or a history of defaulting on loans. Armed with this information, you can take precautionary measures, set appropriate credit limits, or even opt for alternative payment arrangements. By proactively taking these steps, you can safeguard your future business relationships through mitigating potential risks. 


Negotiating favourable terms

Knowing your customers and business partner's creditworthiness can empower you during negotiations. If you discover that they have a strong credit history, you may feel more confident in offering them favourable payment terms or higher credit limits. Offering more favourable terms to reliable businesses will help to foster good relationships. 
On the other hand, if the credit check reveals potential risks such as a declining payment performance or CCJ registered, you can be prepared to negotiate for more secure payment methods or shorter payment cycles to mitigate potential losses. Although the business might prefer better terms, offering realistic terms will help to foster better relationships long-term as there is a reduced risk of late or non-payment. 


Avoiding bad debt and late payments

One of the most significant advantages of credit checking is avoiding bad debt and late payments. Late or non-payment by customers can severely impact your cash flow and disrupt your business operations. By regularly monitoring the creditworthiness of your clients, you can identify warning signs and take proactive measures to avoid these challenges. 

Spotting these early on allows you to open up a line of communication with the late paying customer, to try and resolve the challenge with plenty of notice and in a way that works for all parties, helping to foster greater trust. 

If you do spot any risks with your clients, try to communicate a personalised message, respecting their circumstances. Being attentive to your business customer’s financial health and offering support during challenging times can strengthen the relationship.

Strengthening supplier relationships

As well as credit checking your customers, credit checks on your suppliers are equally important. Assessing the financial stability of your suppliers helps ensure their ability to deliver products or services on time and with consistent quality. An unreliable supplier could lead to production delays, damaged reputation, and potential financial losses. By engaging with financially secure suppliers, you enhance the stability of your supply chain, fostering a good and robust business relationship.


By incorporating credit checks into your business practices, you can make informed decisions that benefit you and your partners in the long run. This will help you to nurture healthy business relationships not only enhances your reputation, but also lays the foundation for continued success. 

Using your Capitalise for Business account, you’re able to monitor the credit profiles of the companies you work with all in one place, so your business can effectively and efficiently credit check. 

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