In order to gain a better insight into how a company operates, you need to know more about the people running the business and their history. Inside a company credit report, you will find information including the name, address, and date of birth of the directors and shareholders within that company.
While credit checking a new customer, you may find that the company in question is a start-up with very little credit to its name to date. By analysing its directors, you could establish that the subject is headed up by a director with a wide portfolio of successful businesses under their belt. This may give you incentive to extend credit to that business despite its relative youth.
“60% of UK directors were once the director of a company that is no longer trading”
It pays to understand how a company is performing, and delving into company financials enables you to identify any detrimental trends in cashflow. All limited companies registered with Companies House are required to submit accounts on an annual basis.
This information includes profit & loss statement, the balance sheet, capital and reserves, cashflow and other financial items. It will also include ratios such as creditor and debtor days, pre-tax profit margins and so on. These are all taken into account when determining the company credit score, however, the information is there for the viewer with an eye for numbers to delve deeper if they so wish.
These annual filings can ultimately tell you how the company performed in the previous 12 months and helps to understand any risks associated with a company. By analysing the most recent financial data alongside real-time factors such as a company’s credit score, you can have an insight into a company’s predicted performance over the next 12-month period.
With late payments continuing to be a problem for many businesses in the UK, you should always do your due diligence on potential customers before dealing with them.
Company credit reports show you any adverse information on a company, such as County Court Judgements (CCJs). This is where the company in question has failed to pay an invoice to another and has been taken to court to have the debt paid.
For example, if the CCJ is paid or successfully disputed within 30 days, it will be removed from the credit report. However, if it is paid late or not at all, it will either show as outstanding or settled on the company credit report for six years.