How To Credit Check A Business Customer Before You Offer Credit
Every time you agree to be paid in 30 or 60 days, you're lending that customer money. Most businesses wouldn't hand over thousands of pounds to a stranger without checking them first, yet plenty agree payment terms on the strength of a handshake and a polite email. A few minutes of checking before you start can save months of chasing later.
In short: to credit check a business customer, confirm who they are on Companies House, review their filed accounts, directors, charges and insolvency records, check for county court judgments and insolvency notices, and consider a credit reference agency report for a score, a suggested credit limit and payment behaviour. Then set your terms to match the risk, and re-check periodically.
Why Check Before You Offer Terms
Offering payment terms is a form of unsecured lending. If the customer can't or won't pay, you've already done the work or supplied the goods. Checking beforehand won't remove that risk, but it tells you how much of it you're taking on and whether to protect yourself with a lower limit, shorter terms or payment up front.
Credit information on limited companies is publicly available, so you don't need a company's permission to look at its public record. This guide focuses on limited companies. Sole traders and partnerships are different, because personal information is involved, so they need more careful handling.
Step 1: Confirm Who You're Dealing With
Start with the basics: the company's registered name, registration number, registered office and status. Check that these match what the customer has told you, and look at when the company was incorporated and whether it has changed its name. A very new company isn't necessarily a problem, but it has no track record for you to assess.
It's also sensible to verify contact details independently, rather than relying only on the details you've been given.
Step 2: Review The Company's Public Record
Companies House offers free access to company information, including filed accounts, director details, registered charges and insolvency records. A few things are worth looking for:
Accounts and filings: are they filed on time? Late or overdue filings can be a warning sign.
Financial health: do the accounts show persistent losses or very thin liquidity?
Charges: registered charges show lenders who may rank ahead of you if things go wrong.
Directors: frequent changes, or links to previously failed companies, are worth a closer look.
Step 3: Check For Judgments And Insolvency Notices
County court judgments (CCJs) are held on a public register maintained by Registry Trust, which you can search by company name or number. A judgment suggests a debt went unpaid and had to be pursued through the courts. It's one of the clearer red flags.
It's also worth checking The Gazette for insolvency notices, such as winding-up petitions. A petition against a company is a serious sign of distress.
Step 4: Run A Credit Check With Glenwood
The public registers show you what a company has filed and what has been recorded against it. A credit check goes further, giving you a clearer view of the company's financial position and risk in one place, so you can decide on credit with more confidence.
Glenwood has its own credit checking platform, so you can check a customer before you agree terms without needing a separate provider. With our specialised credit reports and real-time monitoring system, you're not just relying on generic data but on nuanced information curated for the construction world.
Step 5: Turn What You Find Into Terms
A check is only useful if it changes what you do. Depending on the result, you might:
Set a credit limit, rather than letting exposure build up unchecked
Offer shorter payment terms
Ask for a deposit or payment up front on larger orders
Request a personal or parent company guarantee
Decline to offer credit at all
Don't Stop At One Check
A customer's position can change, so a check done when you first took them on may be out of date a year later. Many businesses re-check at least once a year, and before large new orders. If a reliable payer starts paying late, that change is also a signal to look again.
What If A Customer Still Doesn't Pay?
Even a clean check is a guide, not a guarantee. If an invoice has gone overdue and the customer has gone quiet, acting early gives you the most options. Specialist commercial debt recovery can help you recover what you're owed, and if you'd like help checking customers before you offer credit, our credit checking service can support that too.
FAQs
How do I credit check a company in the UK? Look the company up on Companies House for its accounts, directors, charges and insolvency records, search for CCJs, and consider a report from a credit reference agency for a score and credit limit.
Do I need a customer's permission to credit check their company? For limited companies, credit information is publicly available, so you don't need permission to review it. Sole traders and partnerships are different because personal data is involved.
Can I check if a company has CCJs? Yes. County court judgments are held on a public register maintained by Registry Trust, and CCJs also appear in credit reference agency reports.
How often should I re-check a customer? Many businesses check at least once a year, and before large new orders or when payment behaviour changes.
Is a credit check a guarantee a customer will pay? No. It's a guide to risk. It helps you set sensible terms, but it can't promise a customer will pay on time.
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