How to Check a Business Customer’s Credit

It’s been said that, “Those who ignore history are doomed to repeat it.”  Ensuring that a business you plan to extend credit to is worthy and able to repay it is key to running a successful enterprise.  Here are some key ways to check a business customer’s credit:

Credit reports – credit reports reveal key data that is central to decision-making about extending credit, including payment history, corporate records, bankruptcy filings, liens and tax judgments.

Financial statements – asking customers for financial statements helps you gauge the financial health of the company.

Credit references – ask your customer for a list of suppliers they already do business with, and phone them yourself.

Letters of credit – for new businesses, bona fide letters of credit are good indicators of a company’s ability to pay in the future.

Personal credit reports – if you’re thinking about extending credit to a new or closely held business where a credit report may not be available, run a personal credit check on the owner or CEO.  If they have a good credit history, there’s a better chance their company will take its obligations to pay seriously as well.

The Jayaram Law is a Chicago business law firm providing a range of legal services to middle-market businesses, with an emphasis on business litigation, business to business collections, local counsel representation, preparation and review of business transactions, and copyright and trademark licensing.

The Jayaram Law routinely and successfully assists its clients in their business-to-business collection needs.  We take pride in obtaining payment on accounts receivables without fracturing critical business relationships or engaging in time-consuming and costly litigation efforts.  If you need business debt collection services conducted in a professional manner, contact our B2B debt collection law firm.