Another fundamental you should be doing to keep your cash flow healthy is reviewing the business credit score of potential customers (before signing new contracts) and existing prospects. which provides all sorts of information about their financial health. Not only can you find out their business credit scores, credit limits, percent and total amount of money they owe (past due), their average days beyond terms (DBT), but you can also see the total number of legal filings and UCC filings against them and so much more.
So, imagine your sales team has been working to close a new business deal for the last six months and now they’ve brought that deal to your finance/credit control team. Your sales team is excited about the deal and see it as a major revenue driver. But then…your deal gets nixed by the finance team because it doesn’t meet your company’s credit policy. Your sales team certainly won’t be happy about that.
But it’s likely the best decision your company could have made because when your finance team ran a business credit check on the business, their business credit report showed all sorts of red flags, like being deemed a ‘very high risk’ and having a large amount of money (in the millions) past due. As our ‘Sales vs. Credit Control Battle’ research study found, over half (52%) of the US sales managers we surveyed said that they lose up to $200,000 a month because their deals didn’t meet the company’s credit policy. That’s a lot of lost revenue for businesses. But it’s even worse for smaller businesses who count on every single sale to stay afloat and grow long-term.
In a battle against bankruptcy, checking the business credit report of potential customers and existing customers can make all the difference. It’ll save you the headache of working with companies that don’t pay on time and have legal filings against them (draining them of millions of dollars). If you work with high risk businesses, then your own business will suffer – making it harder to keep your cash flowing and less likely that you’ll be approved for a business loan, if and when the time comes that you need one.