Less than one in 10 New Zealand businesses are credit checking their customers, and many businesses are still relying on references and personal guarantees before extending credit to a potential customer.
But did you know, you are 15 times more likely to get paid by a company with a high credit score, than by a company with a low credit score? Business credit reports are the simplest way to credit check a business before you start trading with a new customer.
We answer some of the most common questions we get asked about business credit reports below:
ONE: How will Business Credit Reports help my business?
Business credit reports help you understand a potential customer’s creditworthiness. That is, the likelihood that they will pay their bills, based on their payment history with other creditors.
Using this information, you can protect your cashflow by only extending credit to businesses who are likely to pay you on time.
TWO: What information is in a Business Credit Report?
Business credit reports give you access to a company’s payment history and business credit score, to help you understand whether they are at risk of defaulting on payments.
You can also use business report services to access a beneficial owner’s report and corporate family tree to easily understand the company shareholding structure, and also request access to a company directors’ consumer credit file.
THREE: What is a good business credit score?
A business credit score is a number between 0 and 1,000 that indicates a company’s creditworthiness, or how likely a business is to pay their bills on time. Most credit scores are between 300 and 850. The higher the score, the better the credit rating.
You are 15 times more likely to get paid by a company with a high credit score, than by a company with a low credit score.
FOUR: How much does a business credit report cost?
You can buy one-off business credit reports from Centrix for $49 + GST – simply paying by credit card, without the need to open an account.
If you would like to access multiple business credit reports, you can buy a discounted bundle here, or open an account with Centrix here.
FIVE: Will credit checking add to my business overheads?
There may be some initial resources required to change your business processes, customer contracts and terms of trade to include credit checking.
However, once it becomes part of business-as-usual, you will save time and money by credit checking customers, as the number of bad debts you need to spend time collecting, or even write-off, will reduce over time.
SIX: Should I credit check my existing customers?
Credit checking your existing customers helps you to understand which companies have had issues in the past, as well as accessing their recent payment histories. You can find out which of your customers are doing well and look at early indicators of who is having issues paying their bills.
The Centrix Portfolio HealthCheck service provides a cost-effective way to monitor the risk of your existing accounts and protect your long-term cashflow. This is a powerful tool to understand if your sales and growth strategy is working and if you are getting the right type of customers.
You can engage with each of your customers based on their propensity to pay and get notifications of changes in your customers’ credit scores, to help you manage risk.
SEVEN: How can I automate credit checking?
Talk to Centrix if you’re interested in automating your credit checking processes. We thrive on innovation and can help you access real-time data with deeper insights – increasing reward and reducing risk.
EIGHT: Why can’t I rely on references and personal guarantees?
References may not reflect a company’s current financial situation, especially if they are from past suppliers who haven’t had any recent transactions on credit with your customer. And you may find a personal guarantee is difficult to collect if a company goes into liquidation.
NINE: Can I credit check international companies?
Many large international companies operate local subsidiaries, so you can check the local company’s business credit report and find out how their New Zealand business is operating.
TEN: What’s the return on investment for business credit reports?
Businesses with high credit scores are 15 times more likely to pay their bills than those with low credit scores. By running a business credit report and checking your customers’ credit scores in advance, you can decide to offer credit accounts only to customers with high credit scores.
Over the course of a year, the savings made from running initial credit checks on business customers (a business credit report starts at just $49) far outweigh the upfront costs and can offer peace of mind to Kiwi business owners. For more information read our article about the ROI on credit reports.
Get credit reports online
To get a credit report and access the credit score and creditworthiness rating of a person or business before extending credit, visit https://www.centrix.co.nz/get-reports/