Fact finding mission – Assessing customers’ creditworthiness

Description

Abstract: Business bankruptcies are up, and many companies that escaped bankruptcy are struggling. But most businesses need to extend credit to attract and keep customers. The key is to take steps to limit the risk that they won’t be paid. A first step is to ask new customers to complete a credit application. Next up is contacting the potential customer’s trade and bank references, and to study third-party evaluations such as newspaper articles and reports from credit rating agencies. A sidebar to this article offers suggestions for collecting from slow-paying customers.