Run a commercial credit check in South Africa if a client wants payment terms?
These days with the amount of fraud taking place, you cannot afford not to run commercial credit checks in South Africa on any client requesting any form of payment terms. Many small business owners will know all too well the excitement that can come from getting an offer from a big contract from a large well-established company. If can be a great opportunity for your brand to grow and if managed properly you could gain a well-known brand as a client. More importantly, these clients have the potential of becoming great repeat customers.The problem with most large companies is that they often insist on their vendors offering credit payment terms. These net payment terms give them up to 60 days to pay invoices. Unfortunately, business owners seldom consider the full financial implications of accepting these terms, only to find themselves with financial problems later.
Can you afford to give terms? Be sure to double-check
Before offering credit terms to clients, determine if you can actually afford to do so. Keep in mind that your company needs to spend money to service clients. You will need to pay salaries, subcontractors, and vendors for up to 60 days before you see any payback.
You need to calculate the approximate cost to deliver your services and then determine if you can wait to get paid. Make sure that your company does not run out of money while waiting for payments. This is often a problem for small firms. Unfortunately, once you run out of money you are usually also out of options. So managing your cash flow is key to handling these larger clients.
Does your client deserve credit?
Even if you can afford it, offering payment terms is not always a good idea. Make sure that your client has a good payment reputation; otherwise, you could find yourself with a collections nightmare and serious cash flow problems. And don’t assume that a client is a good payer just because they are a large, well-known brand. Many large companies are bad payers. Perform a little due diligence to determine how well a client pays by getting a commercial credit report. Unlike consumer credit reports, which have restrictions, commercial credit reports are available to anyone. A commercial credit report allows you to see how a company pays its vendors. This is an indicator of how quickly they will pay you.
i-Check Data Solutions can help you to pre-vet any supplier or client who is requesting credit terms. We have a powerful comprehensive credit report that is affordable and designed to give you peace of mind. If you would like to know more about this or our other solutions please do not hesitate to contact us today!
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