Credit checking your customers and setting credit limits

Credit checking potential customers

Guide

If you don't know a potential customer's credit history, there is a risk of being paid late or not being paid at all.

You should ask all potential customers to complete a form authorising you to get bank, credit and trade references.

The form should include:

  • The full name of the customer's business and any other names it trades under.
  • Details of who owns - and who runs - the business.
  • The legal status of the business, eg sole trader, partnership, limited liability partnership, public limited company. For more on the various legal structures, see legal structures for businesses - an overview.
  • Registration number - if it's a limited company.
  • How much credit is being asked for.
  • Full contact details of the person responsible for payment queries.
  • Delivery and invoice address if different.
  • Bank account details.
  • A request for consent to make bank reference checks.
  • A request for consent to get a credit check from a credit reference agency.
  • A request for consent to get at least two trade references.

You should then make the necessary checks with the customer's bank, a credit reference agency and their suppliers.