Credit checks of existing and new customers are always a good idea. It can It can help avoid or minimize the number of bad payers, debt collection cases and the hassle that is undeniably associated with missing payments.
In this article, we give you 5 tips on when we think you should credit check your customers - because maybe not all customers should actually be credit checked.
1. Credit check existing customers
Most companies don't think about it, and therefore often do it very rarely; credit check their existing customers. You may have been doing business with a company for 10 years without any payment issues. But your customers' financial situation changes throughout their existence - and it can affect your business if you or your salespeople don't catch these changes in time.
Our advice is to make sure you run credit checks on your existing customer database - perhaps at regular intervals or every time they do business with you.
2. Credit check new customers
Credit checks are most often done in connection with the establishment of new customer relationships. You do not know the new customer's financial situation, their ability to pay or similar. The credit check can help reveal/illuminate this.
We recommend that you always check the financial situation of new customers via a credit check. It is up to you to decide whether all new customers, only private customers, only businesses (corporate customers), or perhaps only customers who want credit above a certain size should be credit assessed.
3. Credit check based on the size of the order/credit
While most companies know that credit checks on new customers are a good idea, few do credit checks based on the size of the order or credit. Because the larger the credit or order - the higher your risk of loss.
Therefore, it might be a good idea to consider introducing credit checks every time a customer purchases more than a certain amount, regardless of your previous payment history with the customer.
That way, you don't have to spend time credit-checking every customer and every order, but only those that pose the greatest monetary risk to your business.
4. Opsæt løbende kreditmonitorering
De fleste virksomheder kredittjekker kun nye kunder, eller kunder når de handler for et vist beløb. Men har du nogensinde overvejet at opsætte løbende kreditmonitorering af dine kunder? På den måde får du beskeder, når (hvis) der sker noget med dine kunder; ændringer af økonomi, ændringer af kreditstatus eller måske en konkurs.
With Qatchr, this feature is available in your product and you avoid your sellers dealing with a company that is in foreclosure or facing other financial challenges.
5. Opsæt en proces der passer dig – og din virksomhed
No two businesses are the same, and neither are their credit rating needs; some businesses deal with many customers, while others deal with very few large customers. Regardless of the constellation of your customer portfolio - and the composition of your business - there is always a need to make good decisions based on relevant data, including credit ratings.
We recommend that your company sets up a process for credit assessments; maybe only certain customers? All customers? Only those who shop for over 5,000 DKK? Or maybe only new customers?
There are many ways to handle your credit policy, but make sure you establish a clear procedure - and then make sure that everyone; accountants, finance people, salespeople and others who have contact with customers, also follow your procedures. There can be major financial consequences if they are not followed consistently.
