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The Magic Number

Credit check scores don’t tell you everything about a company you are doing business with, but they are an invaluable tool, says Mike Collins.

Age is just a number, they say, and when the number is 79, it’s an age worth celebrating.

However, when 79 is your company credit score, this is also something to shout about. The BPMA is a 79 – what are you?

A credit score of 79 out of 100 equates to one of confidence and low risk potential. Praise indeed.

But how reliable exactly are credit reports and their inbuilt data?

Each and every credit report comes with the caveat that ratings are “based on the latest accounts filed at Companies House”, which means that they are quickly out of date. Accordingly, credit reports should be just one piece of your credit management jigsaw.

Whether you are a supplier or a distributor the same rules apply. The message here is to remind you of the importance of regular credit checking and monitoring of customers as an integral part of your financial safety.

Every new credit account application you receive must start with a credit check to establish whether the potential customer is one that you should work with. Ideally your process must also include a robust set of terms and conditions that customers agree to.

The first rule of effective credit control rule is that you should treat every customer as a potential debtor. Whether a customer is established or new you should always make careful credit decisions. Having the correct tools available and at your disposal to help make that decision is vital.

Just as important, we recommend that every BPMA AccountAssyst client regularly reviews all credit customers as factors change very quickly, both for good and bad.

In today’s world, credit checking options are fully automated and readily available. The greatest challenge faced when instigating credit checking is the modest time it takes to complete the process.

However, as industry leaders for the past 10 years, our experience tells us that investing a little time at the outset is far less than the additional time it may take to pursue bad debt when a customer turns rogue.

So don’t delay, start getting your systems right today to protect your business.

Why not see how suppliers see your business when they are considering whether you’re worthy to work with. Use this as your first step to creating a robust credit checking facility.

For your complimentary credit check on your own business simply visit bpma.accountassyst.com and click Join Now. Your BPMA membership benefit entitles you to up to 100 free credit reports, as well as access to several other crucial business support tools including new customer account opening, contractual formation with terms and conditions and credit control chasing facilities.

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