How Important are Credit Checks for your Small Business?

Imagine conducting business in an ideal world – a world where everyone is honest and truthful and the thought of cheating someone never enters the conscious mind. Nice fantasy but hardly reflective of our modern society.

Not to cast disparaging remarks on the average consumer. Most of us are honest and hardworking. We pay our taxes and our bills on time. However, many a small business owner has fallen victim to the customer who has been extended credit and fails to pay the bill, leaving the business owner absorbing the debt.

Credit, both extending and receiving, has become a way of life in our world. Truthfully, it is not a modern concept. Credit has existed probably for as long as commerce and trading. Similarly, the unpaid debt has probably existed equally as long. Today, though, there are modern tools to help afford the business owner a certain degree of protection.

The credit check is a tool that can save the business owner much grief and heartache. Before extending credit to an unknown customer, it is wise to invest in a credit report, especially if a large amount of credit is being considered.

A credit report, obtainable for a fee through several agencies, gives complete information about the customer. The report will include the customer's historical payment data, records of any bankruptcies, lawsuits, liens, or any other court judgments. Based on the data, the report will also offer a risk rating that predicts the likelihood of bill payment by the individual.

Credit in business is partially risk. Risk management, via a credit report, is an advisable investment for your business.
 
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