Giving your customers products and services on credit is among the best ways to increase sales in your business. This is also one way to maintain customer loyalty and boost your marketing efforts. Ensure you assess your customer base before approving credit to avoid cash flow issues. By learning how to check your client’s business credit, meeting your expectations remains easy. This guide explains more.
Check the Client’s Financial Health and Capabilities
You want to work with clients that can handle and utilize the credit given and make timely repayments. As you strive to maintain a sustainable cash flow, ensure your clients can make your efforts worthwhile. Checking your client’s financial health and capability should therefore be a priority. It is easy to approve business credit to a client or company you are confident working with.
Review Client’s Credit Score
Going through your client’s credit report will help you determine their eligibility. By reviewing the report, you learn about their financial history, current debt, and creditworthiness. With the information in mind, it becomes easier to give them products and services on credit. The profile, financial data, and credit activity you learn will also help determine the relationship to have with the client.
Ask for References
The easiest way to learn about your client’s credit history is through references. Request trade references, and gather relevant information before extending the business credit offer. Ask questions and seek clarification from the references to avoid making costly mistakes. Also, be keen on your client’s previous business relationship before deciding.
Gather Information on Debt-to-Income Ratio
It is important to know the portion of the client’s debt that makes up its earnings. Calculating the client’s monthly debt payment and the gross monthly income will help determine their creditworthiness. Ensure the client provides the right financial statements to help you make the calculations and informed decisions. Alternatively, seek expert help to gather information and make the calculations without errors.
Do Your Research
While depending on the provided client’s financial report will help you determine their creditworthiness, do your research. The chances of missing important variables are higher. Make time to research the client before approving the business credit, especially the risk checks. Dig deeper into stories and situations that might be of concern to your business.
By checking your client’s business credit, creating a productive and sustainable relationship remains possible. It is important to learn the process and easily achieve your goal. Contact the experts at Achieve Capital Advisors today for more information.