Succeed As Your Own Boss

ENDING SMALL BUSINESS FAILURE

  • Home
  • About
  • Book Melinda
  • Consulting
  • SBL Store
    • Books/Workbooks
    • LifePlanningJournal
    • 30 Day Fast Start Program
    • Become Your Own Boss Course
    • Become Your Own Boss Bundle
    • Fix Your Business Masterclass
    • Write A Business Plan Course
    • One-on-One VIP Coaching
  • Subscribe to Podcast
  • #Smallbizchat
    • Be a #SmallBizChat Guest
  • Blog
    • Write For Us
  • Contact
You are here: Home / Cash Flow & Finance / How To Investigate A Business Customer’s Credit

How To Investigate A Business Customer’s Credit

July 14, 2015 By Melinda Emerson Leave a Comment

Feel free to share...Share on Facebook
Facebook
Tweet about this on Twitter
Twitter
Share on LinkedIn
Linkedin
Pin on Pinterest
Pinterest
Share on Reddit
Reddit
Email this to someone
email
Print this page
Print

business-740075_640Guest Article

You have a new customer and they want to pay after you deliver your product or service. Essentially they are asking you to extend them credit. Like every bank that lends money, you should check your customer’s credit to make sure they have the financial capability to pay you when the time comes. There are 5 easy and inexpensive steps to investigating your customer’s creditworthiness.

  1. Collect Information and Get Permission

Before you can investigate your customer, you need to get some basic data, such as their business name, contact information, bank and trade references. Normally this is done on a credit application. Typically this is a one or two-page document that your customer fills out, signs, and returns. The credit application will include language to give you permission to check their credit.

If you don’t have a credit application, you can find samples on the Internet by searching for credit application templates or forms. The credit app can be used to set legal terms to protect you in the event your customer does not pay on time.

  1. Confirm Legal Name of Business

It is important to know the legal entity you are actually dealing with. This can be easily checked online for free. All states have Secretary of State websites where you can search for “business entity” or “business name” to confirm the exact legal name of corporations, LLCs (limited liability company), and partnerships. If the name you check doesn’t come up in the search, ask your customer if they have a different legal name or are registered in a different state, which you can then verify.

  1. Run A Business Credit Report

A typical business credit report will tell you if your customer has outstanding judgments or tax liens for unpaid bills. You should be concerned about getting paid if they aren’t paying others. You can get reports from Ansonia, Cortera, CreditNet, Dun & Bradstreet, Equifax, Experian, Kroll or Transunion. The cost can range from $8 to $188 for an individual report, or as low as 3 cents each with a subscription. Reports can include information on how your customer pays other vendors and a credit risk rating.

  1. Check Trade References

Contact the vendors that your customer named on the credit application. Ask how long they have done business together, the maximum amount of credit they have extended in the last year, and the average amount of time it takes for the customer to pay. You may also want to ask separately if they have been late on any invoices during the last 6 months.

  1. Check the Bank Reference

Banks won’t tell you much, but they usually confirm when the account was opened and the approximate average balance. You may want to specify that you are seeking the average balance during the last 6 or 12 months. The banks will ask to see where you got permission from your customer to release information.

Once you have a process in place, it should take 15 minutes or less to check a company’s credit.   That’s a small investment to dramatically reduce the chances of not getting paid.

Dean KaplanAbout the author:  Dean Kaplan is President of The Kaplan Group, a commercial collection agency and consulting firm. He has closed over $500 million in M&A transactions as a CFO, consultant, and entrepreneur. 

Feel free to share...Share on Facebook
Facebook
Tweet about this on Twitter
Twitter
Share on LinkedIn
Linkedin
Pin on Pinterest
Pinterest
Share on Reddit
Reddit
Email this to someone
email
Print this page
Print

Filed Under: Cash Flow & Finance, Guest Articles Tagged With: @TheKaplanGroup, business credit, business credit report, Dean Kaplan, trade references

Fix Your Business Now!

Order SmallBizLady's new book Fix Your Business, 90-Day plan to Get Back Your Life and Reduce Chaos in Your Business. It includes the 12 Ps of Running a Successful Business and readers will finish the book with a new strategic plan to take their business to the next level.

About Melinda Emerson

Melinda F. Emerson, known to many as SmallBizLady is one of America's leading small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure. As CEO of Quintessence Multimedia, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine named her #1 woman for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog http://www.succeedasyourownboss.com Melinda is also bestseller author of Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works. Her latest ebook, How To Become a Social Media Ninja; 101 Ways to Dominate Your Competition Online was released in 2012.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Let’s Connect

  • Facebook
  • Instagram
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

Let me send my best blog posts to your inbox each week.

Click Here to Sign Up!

Get 2 FREE Chapters of SmallBizLady’s Book,
"Become Your Own Boss"!

Become Your Own Boss Download Two FREE Chapters

Most Popular Posts

>Seven Ways to be More Profitable in Your Small Business
> 7 Ways to Attract Customers to Your Small Business
> 6 Tips for Managing Small Business Finances
> How to Run a Successful Multilevel Marketing Business
> 10 Ways to Grow Your Small Business With Instagram
> How to Sell on Facebook
> How to Get Over the Fear of Starting a New Business

Featured Videos

“12 Principles of Highly Profitable Businesses with Melinda Emerson” from Sonia Dumas
October 2020

#SmallBizChat LIVE from NYC
May 2017

MSNBC Interview
Top Tip: Never Let a Customer Down

National Speakers Association
Winter Conference 2016

Tune in to Exhale, Wednesdays at 9 pm EST, only on ASPiRE. Join the conversation at #EXHALETV

Fox Business
Five Steps to Becoming a ‘Social Media Ninja

MSNBC
The importance of job mentoring for women

#SmallBizChat Live
National Small Business Week: Q&A

Good Day Philadelphia
Expert Shares Tips on How to Become Your Own Boss

Google
Best Practice for Social Media

Testimonials

Become Your Own Boss is a must read if you’re thinking of launching a business of your own.
Jean Chatzky, Bestselling Author of Money 911 and Financial Editor of NBC’s Today Show
Great step-by-step advice for anyone looking to start their own business.
Andrew C. Taylor, Chairman, Enterprise Rent-A-Car
Melinda Emerson has written a remarkable book. It is essential reading for anyone seeking to make the transition from working girl to successfully working it, as an entrepreneur.
Cynthia McClain-Hill, Past President, National Association of Women Business Owners
The perfect companion for those planning to go out on their own. Melinda delivers firsthand practical advice on how to be the successful entrepreneur. Read it if you want to get it right the first time.
Kenneth L. Shropshire, Professor at the Wharton School of Business, University of Pennsylvania
If you are looking for a versatile speaker who can talk about how to grow small businesses or get started with social media, look no further.
Heather Van Sickle Executive Director, National Association for Community College Entrepreneurship (NACCE)
Her wit and depth of subject knowledge were entertaining and empowering. Melinda is definitely on our short list of seasoned entrepreneurs and business leaders we look to invite back in the near future.
Tennille M. Robinson Senior content & Event producer for Inc. magazine
Melinda Emerson, “SmallBizLady,” is an engaging and witty speaker and a great addition to any conference. Her terrific presentation and compelling delivery give people the information they need and want to become their own bosses and grow success… Read more
Laurie Dalton White Conference Director, Pennsylvania Conference for Women
Melinda Emerson has been a fantastic small business and social media resource for the Pitney Bowes team. Not only is she personable and easy to work with, but she also has an innate understanding of the small business audience. My marketing programs … Read more
Justin Amendola, Former VP, Global SMB Digital Strategy, Pitney Bowes

SmallBizChat

  • Twitter

Latest #SmallBizChat

The Future of the Workplace in a Post-COVID Environment Featured Image

The Future of the Workplace in a Post-COVID Environment

The workplace is shifting and evolving in some surprising ways as the response to COVID-19 develops. I know I’m not the only one who’s had to adjust and rethink the way I do business. No matter what industry you find yourself in, you’re facing some unforeseen challenges from the ongoing virus, and you’re probably wondering […]

Recent Comments

  • Bada Business ibc on 5 Tips for Getting More Online Reviews for Your Small Business
  • Justin Marble on TikTok vs. Snapchat: Which One Is Better for Marketing? [Infographic]
  • sathya on 15 Mistakes Not To Make In Your Digital Marketing Approach
  • Agency Platform Ebrandz on TikTok vs. Snapchat: Which One Is Better for Marketing? [Infographic]
  • Sejal on 15 Mistakes Not To Make In Your Digital Marketing Approach

#SmallBizChat

  • SmallBizChat Archive
  • @SmallBizLady

Business Advice

  • How to Start

SmallBizLady Store

  • Products
  • Free Chapter

Get In Touch

  • Write For Us
  • FAQ
  • Be a #SmallBizChat Guest
  • Contact Us
Copyright © 2019
Quintessence Group
PO Box 280
Drexel Hill, PA 19026
(610) 352-0680
Privacy Policy · Refund Policy

Copyright © 2021 · News Pro Theme on Genesis Framework · WordPress · Log in