Companies across the UK are risking either being paid late or not being paid at all due to the fact they fail to check their customers’ credit ratings, research from Experian has revealed.
The survey involved nearly 700 UK small businesses, with 71% reporting they did not check credit ratings whatsoever.
Customers who have poor credit scores may not be financially secure and thus might not have the ability to be able to pay you for your products or services. With average payment times increasing during the economic downturn as companies look to pay at the last minute, it is vital that SMEs realise which of its potential customers have poor credit scores so they can properly assess the risk of doing business with said company.
The survey also revealed that 39% of respondents didn’t know what a credit score was, whilst more than 6 in 10 have never checked their own score.
Without knowing your own credit score, you might not be aware of why you are turned down for finance requests, as you can be sure that banks and other finance providers will look at your credit score to determine how reliable a client you are.
Potential new customers may choose to do their business elsewhere due to a poor credit rating, whilst suppliers might also turn down your requests for materials on a similar basis.