How well do you know your customers?
Tuesday, 9th July 2019 13:25

Probably not a question you ask too often in business if things are going smoothly. However, when invoices are unpaid and phone calls unanswered, it’s asking the right questions or digging a little deeper into whom you are working with in those early days that could save you a lot of time, energy and most importantly – cash.

There were 4,187 company insolvencies in Q1 2019; which is a 6.3% increase from Q4, 2018. There are many reasons why businesses fail  – increase in competition, loss of a valuable customer, poor employee retention – but the most common reason for failing businesses is poor cash flow;  basically not enough money coming in to cover the costs going out. One of the best ways to keep cash flow moving through a business is to make sure that you are getting paid when you expect to get paid.

When it comes to protecting your business from working with a customer who has a poor trading history, it is vital that you have procedures in place that can flag negative activity to you before you enter into a business relationship.  All companies – no matter what their size – should apply a basic due diligence assessment of a potential customer’s business before signing on the dotted line.

A quick and cost effective way to check if a company is financially stable is to carry out a company audit through identeco’s Business Support Toolkit.  Instant, real time reports  will provide insights into a company’s trading history as well as key information on financials, directors and their associated directorships (take a look at how often companies are changing hands – this can give you an understanding of how operations within the business work). Does your customer have a manageable amount of creditors outstanding? Does their turnover justify the credit terms you are offering? Are there any CCJs against the firm? By knowing the answers to these questions, you can future proof your business against any nasty surprises.

identeco’s Business Support Toolkit provides unlimited company searches and reports for a one off annual fee of £79.95. For a free trial, with no obligation, complete our call back form here