When you are trying to obtain new business, it can be all to tempting to bypass the necessary checks on your new customer. However, giving credit to customers in this way will always leave you exposed to the risk of non-payment. By carrying out credit checks on both your new and existing customers you can greatly reduce your exposure.

At all times we would recommend that you ask all your new customers to complete a credit/trading application form. As a general rule, this form should contain the following information:

• The full name of the customer's business and whether it trades under a different name
• Registration number if a limited company
• Amount of credit being requested
• Full contact details for the person responsible for payment queries
• Delivery and invoice address if different
• Bank and bank account details
• At least two trade references
• Request for consent to obtain bank and credit references
• Details of who owns and runs the business

The key ways of checking a customer's credit worthiness include:

• Checking bank references Checking your customer's payment record with some of their other suppliers, it is always advisable that you, not your customer, choose which ones to approach in order to get an independent view Paying for an online credit rating from a credit reference agency

• Looking at an existing customer's payment history
• Getting feedback from people who have contact with the customer
• Checking a limited company's accounts at Companies House  
• Searching the Register of Judgments Orders and Fines via Registry Trust Ltd
• Checking with the Insolvency Service
• Checking local newspapers