In NZ, every business has a credit score between 1 – 1,000. The higher the score the more likely you are to get paid. Business credit reports are a great tool for understanding your customers, suppliers and debtors, and helping you to manage your cashflow.
Every NZ business has a credit score and getting a business credit report from Centrix can help you assess the risk – of your customers, suppliers and your own business.
A credit score is a number between 0 and 1,000 that indicates financial health, based on previous payment history. You’re 15 x more likely to be paid by a customer with a high credit score than a low score. A Centrix business report includes a business’s credit score, as well as detailed information about a company’s credit accounts and payment history. Ordering business credit reports on your outstanding debtors and spotting who may struggle to pay their bills can give you an opportunity to approach them to work out a plan to get paid.
Centrix business credit reports help you to make more informed business decisions and as a result, manage your cashflow more efficiently.
Click one of the links below – you can purchase a one off business credit report for $49 +gst via credit card – or choose the multiple report option which offers savings by setting up an account. Centrix business credit reports are confidential, real-time and you’ll have the report emailed to you in minutes. Note that if you’re wanting to credit check a sole trader, you will need to do a personal credit check, email us for more information.
If your customer, prospective customer, or supplier has a low credit score, this means that they are at a higher risk of defaulting on future payments, i.e. they have previously not paid other suppliers on time, or have a history of defaults. Knowing a customer’s credit score in advance may help you decide how you approach risk management. It’s best practice to ask new customers to sign terms of trade that give you permission to follow a debt collection process. If you decide to do business with a company with a low credit score, you may also be able to negotiate payment terms that require prepayment or cash on delivery.
On the link below, simply click order a one off business credit report for $49 +GST each, via the button below. Search your business trading name, add credit card details and the report will be emailed to you within minutes. If you think you’ll need more than one credit report a month, click HERE to see discounted multiple report rates.
If you’re a sole trader, you can download a personal credit report at centrix.co.nz for free. Find out more here: www.centrix.co.nz/my-credit-score
If you’re finding yourself in the situation where your business is not being paid, and therefore are not able to pay your own bills, it’s important that you protect your own business credit score.
If cashflow constraints mean you cannot pay your bills on time, approach those that you owe money to early, and start with negotiating payment terms. The aim is not to default on payments wherever possible.
The next step may be to discuss with your bank/lender about access to additional cashflow, such as an overdraft or temporary lending, to cover the period of time you require to pay your bills until you get paid.
This will protect your business credit score and avoid a default against your business. Read more about how to improve your business score here.
Remember in these uncertain times, your customer with a high credit score is likely to be in the same position as you, chasing debtors and managing their cashflow. Now is a good time to reach out and talk to them about payment options, such as paying in instalments, so that you can both protect your credit scores, meet your payment obligations and increase your chances of coming out on the other side of the Covid-19 wave.
Many businesses are struggling during these uncertain times. In additional to credit checking new customers and suppliers, you can also monitor your existing customers for any changes to their circumstances through regular Portfolio Healthchecks, which can alert you to any issues. For example, a change in company status or company directors can be a strong indicator of something going wrong. You may also like to know if your customer ends up in payment default with another credit provider. All of this data helps inform any decisions you make regarding payment terms or supply of goods. Contact us for more information: firstname.lastname@example.org
Business credit reports help you understand a potential customer or suppliers creditworthiness. That is, the likelihood that they will pay their bills, based on their payment history with other creditors.
Companies with high credit scores are 15 times more likely to pay their bills on time than companies with low credit scores. Using this information, you can protect your cashflow by only extending credit to businesses who are likely to pay you on time, or dealing with reliable suppliers.
Having robust Terms of Trade can save you a lot of money by addressing any potential future issues with new customers, from the outset of your relationship. Not only do clear terms give you an opportunity to set payment terms in your favour, but they can also give you a clear recourse of action, should non-payment occur.
Payment disputes can be avoided if there are clear terms in writing before work is started or goods are supplied. Many businesses supply goods and services based on informal agreements, which are open to misinterpretation and difficult to enforce when things go wrong.
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There are some simple things you can start doing to help you protect your business’s cashflow and make sure you have enough working capital to operate smoothly.
Before extending credit to a customer for a product or service, be sure to conduct a credit check. Consumer credit reports and business credit reports, tailored for the Kiwi market will help you understand a potential customer’s creditworthiness.
Define your payment terms in your initial terms of trade when you engage with customers. When you issue an invoice, ensure that your payment terms are clearly communicated again so there can be no misunderstandings around when payment is due.
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Late or missed payments can negatively impact your business credit score, which other businesses will use to quickly evaluate whether to do business with you.
If for any reason you have a cashflow disruption, you can try to negotiate extended payment terms with suppliers upfront to reduce any impact on your business’s credit score.
You can also talk to your bank or other lender for an overdraft or extension of credit, to help with overheads through periods of uncertainty.