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How to use credit reports to your advantage

We examine how credit reports can be used to your advantage as a business owner.

One of the many benefits of using itsettled as your automated credit control system is that we offer free access to credit reports and credit checkers. However, we realise that without any context, it can be difficult to know how to use these reports to your advantage. 

So, what are credit reports? 

Credit reports are reports generated by a company such as Creditsafe or Equifax which detail a businesses credit history and score. Similarly to your own personal credit score, business credit reports are used by other companies to look at how reliable and stable your business is. This means they can be used by you to do all kinds of things, including optimising your business performance. 

So, how can you use credit reports to your advantage? 

1. Check in with new suppliers or business partners.  

Get into the habit of checking a new supplier or partner's credit report before you sign a contract with them. It’s obviously great to be signing new clients and other deals, but you don’t want it to come back and bite you - so do your research first. You can see how quickly a business pays their invoices, and this may give you the push to ask for shorter payment terms if necessary. 

2. Regularly check your suppliers and partners.

It’s no good examining your clients or suppliers credit report at the beginning of your contract and then never checking them again - you should credit check your suppliers at least once a year. This way, you can ensure that they’re still safe to work with. You may even find explanations for late payments - which can give good context for any decisions you may need to make. 

3. Get contacts. 

A benefit of credit reports is that they often include background information on business owners and directors. If you’re about to start working with a large company with whom you may have one or two contacts, it’s helpful to know who owns the company and gain further information. They may already own other companies or have partnerships with other businesses. 

4. Look in the mirror. 

Of course, just as you can look at other businesses credit reports, it is very probable that businesses will be looking at yours. A low credit score can also affect your ability to get loans and business finance. Therefore, it’s good to keep an eye on your own business credit report - there may be things you don’t know about, and it’s often fairly straightforward to fix these. Schedule in a regular reminder to check your credit report so that you don’t forget.

5. Acquiring & growing.

If you’re looking to expand your business, perhaps by buying and acquiring other businesses, then credit reports are a great resource. Use them to check how companies are performing and what their payment terms are like. This can give you insight into what you can do immediately if you do decide to buy them. 

In summary, credit reports and checks are incredibly useful - they give you further information and context, and can allow you to assess risk to your business, so don’t underestimate them. At the same time, remember to look at your own business credit score in order to make sure you don’t miss out on any business opportunities. With itsettled, you get free access to credit reports and checks - so there’s no excuses. 

Find out why you need itsettled’s credit management and debt recovery software here

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