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Our Top 3 Tips for Checking Your Customer’s Creditworthiness

According to reports from recent times that have been released, late payments are increasing and businesses are waiting on average 72 days for payment. Credit is the mainstay in B2B transactions, but payment could be delayed which leaves the company with no option other than to pay your vendors in late because of issues with financial management. The delay in payments can cause issues that could impact the ability of your business to trade. This could lead to weeks of administrative work to track the unpaid payment. This can affect your cash flow as well as the ability to anticipate future cash-flow receipts.

While it might be a familiar phrase, “Cash is King” for every business. An ongoing flow of cash is essential to the success of any business. The question now is how do you make sure that your creditors will pay your invoices on time? And what are the most efficient methods to keep track of payments?

The determine a customer’s creditworthiness prior to giving credit. This is the most effective way to reduce your risk throughout the duration that your relationship with them. Be sure to get knowledge of the creditworthiness of your client before you sign your contract. This way, you can protect your company. It is then ensure the security of your business by obtaining a trustworthy overview of your customer’s financial status.

It is obvious that you must partner with business partners who have the potential to establish a customer base who can afford to pay you, and have the cash flow to back any credit you’re ready to offer. For this, you must verify for creditworthiness in your clients prior to making any credit. In addition, if you’re unsure of what the word “creditworthiness” is, then think of a customer who has a strong payment capacity that allows them to purchase your service or product before you give credit for trade. This is what you should be checking on every customer, current and new. Like everything else in running your business, it’s an activity.

Here are our

Top 3 ways to create an effective process for checking the creditworthiness of your prospective customers

TIP #1 | Use Shergroup’s Credit Report Product

Use Shergroup’s own Credit Report service found on our website at to credit check your new

B2B customer prior to extending credit terms. Our service for B2B is provided by credit specialists who created scorecards in the past to some of the largest companies in the world of credit. They use their experience to offer a more personal and efficient service to assess the creditworthiness of an UK company. With a well-curated report, you’ll be able to know in plain English the actual trading situation of a prospective new client, allowing you to make an informed choice about how much credit they could provide based on their trading performance. The credit Check reports will be prepared from the latest information during the month that you provide it, which means you will receive an assessment of credit that is “real-time”.

Credit Shergroup Check protects

BASIC information, for example verifying for the company registration number as well as the year of incorporation, and net value. You can also find out how old the most recently completed accounts.

Structure and Ownership report will then proceed towards the organization and the ownership of the company including the connected companies. It will also confirm that the company number of all the connected businesses as well as the date when the accounts were account’s last filing.

Our TEAM then give you a glimpse into the current trading situation of the company as well as the way it was created, whether it was an Phoenix company prior to that and what possible pipelines it could have in the near future. This information can provide you with the level of the creditworthiness of the new customer as well as provide insight into commercial aspects for further opportunities.

Our scorecard puts all this data and information into perspective and is unique to every report. It’ll look similar to this

Scores are based on the scale of 1 to 100, where 100 represents the least risk. The highest risk lies within the range 1-10 and we closely watch high risk cases within the range of 11-20.Any cells that become red indicates the pro forma credit terms. This is advised, which is to get payment in advance before supplying goods or services to your client.

Other RISK like debentures, management changes, losses and any changes to the closing of the fiscal year are all mentioned.

KEY FINANCIALS | including the numbers for the most recent sales and fixed assets, as well as current assets, current liabilities working capital, long-term liabilities net worth, liquidity and other liabilities are summarized in an easy-to-read table as shown in the table above. Our experts will provide the context of these financials and assist you in putting them into the context of.

The CONCLUSION Finally, the report will contain our TEAM’s expert opinion regarding the risks you’ll face when trading with a client. For instance, in one of our reports our experts concluded “the opportunity to trade with [X} beyond any very small level of the contract is a leap in the dark”.

The report might be able to recommend whom our client can sign a contract with. This could be a different entity from the organization you would like to conduct business with.

In simple terms the purpose of these reports is to distill all financial data you could gather on a potential customer or an existing client, and provide you with a clear and clear assessment of the risk to your company in conducting business.

TIP #2 | Ask for Bank References

It is possible to ask the bank of your customer for a reference. In exchange for the cost of a minimal fee it is possible to discover how much information the bank will provide about its customers to you. The bank should be able confirm the length of time your potential client has already been a member from the company. If a client is willing to provide a bank reference, then this is a positive sign that the client has a positive relationship with their bank and is willing to divulge the information.

Take this type of info as a foundational element to create a strong community of financial profiles of customers.

TIP #3 | Supplier References

Another method to get an understanding of the creditworthiness of your customer is to request Supplier References from the customer’s current suppliers. The information they provide is authentic and can be a great indicator of the ability of your client to pay them as well as you! Be smart and request several supplier references to ensure that prospective customers don’t swindle you by offering only an unsatisfied supplier’s reference.


The combination of these 3 top tips together will ensure that you have a reliable credit monitoring system that could be implemented throughout all your customer relations.

In time, you might find that certain customers are more successful than others. Sure, those who make their payments on time and are willing to work with you in order to adhere to their payment terms are the ones you’ll like to nurture.
The TOP 3 tips will reveal the clients that you’re allowing. They pay only when they feel their product, they think they’ve got the upper hand but they are actually costing you money by the need to chase them down to pay. Find the customers who are like this and remove them out of your client community. Replace them with those who have strong credit scores and good references.

Make use of Shergroup’s conduct a credit assessment of prospective B2B customers prior to making a the decision of extending credit. This cost-effective service was created with your interests in mind, so that the burden is off your plate based on what you choose. Our team of experts will create the report in accordance with the above, including all details related to credit in order to determine the actual trading status of NEW and existing customers.
For help in increasing the credibility of all your customers in the base or the one customer you want to add at Contact us now at @ [email protected] and visit for more information. Keep in mind that we’re looking after your business, so you can be more creative!

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Last updated | 19 July 2023

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