The importance of knowing the credit worthiness of new customers cannot be emphasised enough.
It is undeniably important for any business to have customers – whether it be individual consumers, other businesses or suppliers – but it is even more important that the customers you do business with are reliable when it comes to paying you for the services or products you tender.
And, while it may seem counterproductive – even absurd – to turn business away, the value of having quality, paying customers who settle their bills on time, cannot be compared to the value (or lack thereof) of having customers who become a burden because they are constantly defaulting on payments.
The bottom line is, you should never be afraid to turn non-creditworthy customers away because, at the end of the day, it is your company’s bottom line that is on the chopping block.
No business – no matter how big or small – can afford to jeopardise profits. In fact, bad debt and cash flow issues have been positioned as the two main reasons start-ups and small businesses fold.
You also need to be aware that, legally, if you either fail to carry out a credit check or you decide to give a non-creditworthy candidate the green light, you have no recourse down the line should they default on payment and, inevitably, your best option would be to write the debt off.
So, without question, it pays to do your homework. In fact, the advantages of carrying out thorough credit checks go beyond just protecting your profits. The process also allows for intensified sales efforts overall, as these can be confidently spent on the right kind of client, the kind that will add to your income – and not take away from it.
pbVerify offers a range of B2B and B2C Credit Risk Management tools for any size business in South Africa that grants credit. For more information visit our products page HERE.