First time credit checking? See below.
REDUCE THE RISK OF LOST DEPOSITS INFORMATION FROM TOP WORLD-WIDE CREDIT AGENCIES FOCUS ON MAKING INFORMED BUYING DECISIONS PASSION FOR INFORMED BUYING DECISIONS FREE PROFESSIONAL ADVICE ON WHAT TO WATCH OUT FOR TAKE CONTROL OF YOUR FINANCES AVAILABLE TO EVERYONE RECOMMENDED PROVIDER OF CREDIT MANAGEMENT AND INFORMATION SERVICES
The Credit Check Company website has been developed to give the ordinary person access to, and clear insight into the finances and status of businesses who would like to provide them with a service or sell them a product. In particular but not exclusively, those businesses who would like them to part with their cash before starting a job, or to "reserve" a desired product, facility or service.
We all know someone who has had their fingers burnt by an unscrupulous tradesman, dodgy dealer, or insolvent service provider.
It almost always ends in frustration tears and the loss of precious, usually hard earned funds.
It need not happen! Check them out before you part with any money! It's easy to do and it costs very little. The information is readily available and easily read with Credit recommendations, risk scores, analyses, explanations and free advice if required. This guide will simplify things for anyone who is a little unsure about what to look for or how to look for it. Live reports are available via our website
Look out for our little advisory "" marks, which when clicked open out into a simple explanation of the section.
When clicked again, it closes the commentary.
It's also worth keeping a lookout for helpful links throughout the report, such as the one circled above.
Who is this site meant for?
Anyone who has been asked to make an up-front payment or deposit for services or goods, any professional person or business who has been asked to extend credit terms to a potential customer in order to win their business, or anyone who is simply curious about a company or trading entity anywhere in the UK./p>
Most of us believe that company reports and credit information available on commercial enterprises, whether they be Global enterprises or small one-man businesses, are a form of dark art, or some kind of secret alchemy decipherable only by accountants, bankers and business gurus.
It almost always ends in frustration tears and the loss of precious, usually hard earned funds.
NOT TRUE - READ ON AND YOU MAY BE SURPRISED!
Choosing Suppliers / Customers
Suppliers who are asking you to pay a deposit or customers asking you for credit terms are asking you to trust them with your money.
As you will probably know, banks want to know everything about you before they're even willing to consider lending you their money; even then they may still decline. They get away with that because there is usually no alternative, and they can. By the same token, you should know who you are giving your money to before parting with a deposit or down payment for a holiday, building works, new car, or whatever! If not, how do you know who it is you are handing over your hard-earned cash to?
Trusting a supplier with your money by paying a deposit or "down payment" certainly comes with certain risks. If the company subsequently goes out of business, it could seriously damage your pocket and lead to heartbreak and tears.
Example: You've just agreed for a company to install a new kitchen in your home. You've decided on materials and the design but now they're asking for a deposit from you. Why?
It may be that they consider you a high risk; it may be that the materials used for your order are only suitable for your kitchen and therefore has costs that cannot be retrieved should you find yourself in a position where you cannot pay;it may be for a number of good, commercial reasons. However, it is important that you are made aware of these reasons and agree to them.
Bear in mind that the reason may be that they are "financially strapped" and, effectively, want to borrow from you (to buy materials) rather than use their own funds or try to borrow from their own bank.
Using CreditCheckCo website will help you to reduce the risks involved in parting with your cash or doing business with a trader you would otherwise know little or nothing about.
Firstly though it is important that you understand what we can tell you, and what we need from you to be able to tell you what you need to know… (Phew that was a mouthful)! Read on now for our guide" to credit checking, for the uninitiated.
First and foremost, find out who is asking for your money.
Ask for credentials, a business card, a compliment slip, or an official quote on their letterhead etc.
Check out their website, (almost any reputable business will have its own website in this day and age). Does it provide a long-term trading address or registered office for the business? If your client, tradesman or contractor can't provide you with any of the above… beware!
Know who you're dealing with
A credit check cannot tell you who you are trading with, you need to ask that question for yourself as above. It just makes sense to ask!
Suppliers can come in all shapes and sizes, ranging from the lady next door who teaches piano, to the multi-national organisations like Google or Apple.
It is important that you know who, or what, you are dealing with. There are several kinds of "Trading entity" or business type that you might be about to deal with…
Sole traders are usually small businesses with few if any employees, working from home, a garage or rented premises. However a Sole Trader can be quite large and may have retained the Sole Trader-ship status for accounting or other purposes.
Sole Traders (and Partnerships – see below) do not have to register their company details with Companies House or, indeed, anywhere else, although some may do so of choice.
This in turn means that there is no legal requirement for the business to file its accounts at Companies House for public (you and me or anyone else) scrutiny.
The proprietor, though, is personally liable for all monies owed by his firm at any time and does not enjoy the protection of a "limited liability company".
Partnerships are run by two or more partners and, again, may be very small businesses or nationwide enterprises, and all sizes in-between. John Lewis is one example of a large partnership.
Again, this means that there is no legal requirement for the business to file its accounts at Companies House for public scrutiny.
The proprietors / partners though, are personally liable for all monies owed by the firm at any time and do not enjoy the protection of a "Limited liability company"
One important point to remember is that, similar to sole traders, both or all partners are "jointly and severally" liable for the partnership debts, so if one partner does a runner, you can sue the remaining partner(s) for all monies owing to you. They are personally liable for any debts of the business. It helps to know where you can find them though.
A limited company (LTD) is a business that has been registered to ensure that its owners have limited liability. So, if the company does capsize tomorrow, the owners will not necessarily be personally liable for any of the monies owed by the company.
Limited Companies come in three sizes, creatively called Small, Medium and Large.
Some examples of limited companies include Argos Limited, Jaguar Land Rover Limited and Harrods Limited.
Public Limited Companies
Public Limited Companies (PLC's) are usually the "big boys" of commerce and the most rigorously controlled with regard to accounting practices. However, some small or medium companies may opt for PLC status, not least to give the impression of size.
Some examples of PLC's include Rolls-Royce PLC, Tesco PLC and BP PLC
Limited Liability Partnerships
Limited Liability Partnerships (LLPs) are a sort of mixture of a Partnership and a Limited Company, most common among professional firms such as accountants, solicitors and other service organisations where "production costs" are relatively small, fees are high and the penalties for error are even higher. Some or all of the partners are personally protected by limited liability but any unprotected partner(s) could be held liable for all its debts. Not a good position to be in, so there are rarely any of those.
Companies Limited by Guarantee
These are most usually charitable operations, non-profit-making by design rather than through incompetence! If they are registered with the Charities Commission they are obliged to file accounts with said Commission but otherwise their filing requirements are basic, as with small limited companies. These companies will be registered at Companies house.
Early indicators of credit worthiness
As is often the case, there are signs to look out for which might indicate how legitimately a company carries out its business.
Every business must comply with the Business Names Registry by showing the ristered or trading Name (if appropriate), the proprietor, or partners or principal directors, on their letter heading, as well as their Principal Place of Business (for the service of any legal documentation).
With limited companies the principal place of business can be either their registered office or their main business premises. If that information is absent, request it as a matter of course.
Ask yourself: Why would a business not want you to know their name, address and other details? It could be a sign that they don't want you enquiring about their business! Or, of course, they might not be aware of the benefits of company branding!
(NOTE: e-mails and other electronic communications must now comply with Business Names Registry rules as well, if they are to be considered as legal documents. Beware of placing orders or other contractual documentation by e-mail without ensuring that the e-mail complies with Business Names Registry requirements. You could end up personally liable for the contract even if you were acting on behalf of a limited company!)
Closer Inspection: Take a look at the supplier's presentation/car/premises. Are they in keeping with the size and style of the business you're expecting? (A £1m turnover and operating out of a shed on a trading estate do NOT tend to go together!)
Now let's look at our guide to Company credit reports.
This guide will explain the difference between types of trading entity. PLC's Limited Companies, Partnerships etc. and what those differences could mean to your trading relationships with them.
It will help you make sense of the credit information available from this website, allowing you to make informed decisions about potential suppliers who would like you to part with your hard-earned cash as a deposit for goods or services to be provided.
Checking on your supplier
Depending on the type of company you are dealing with, there are reports available which will give you more information about the business.
Limited Companies, LLP's Limited by Guarantee
Depending on the size of the company you want to check up on, credit reports can provide a basic or highly detailed insight into the company – and several stages in between.
Remember: look out for our little advisory "" marks, which when clicked open out into a simple explanation of the section, or go to the Glossary of Terms for an explanation of terminology.
Note: If the accounts are overdue, that usually means bad news and should indicate caution, particularly if you're going to trust this company with your money.
The balance sheet lists the company's fixed assets such as machinery (things that are not easily sold), its current assets such as sales ledger & stock (things that can be turned into equivalent cash fairly easily) and cash in bank.
It then shows the company's liabilities, which will include bank overdraft, long and short-term loans and the money owed to suppliers.
The difference between the assets and the liabilities is what the company is worth, sometimes expressed as Shareholders' Funds or Net Worth
Closer inspection: If the report shows figures for the past few years, look for a trend: are the numbers increasing? If so, this is a good sign.
Other useful information includes the share capital. This is the amount of money the shareholder(s) has/have invested in the company. It can be as little as £1.
Normally the share capital is an indicator of the Owner(s) (aka Shareholders) investment in the business and therefore an indicator of their confidence in the business. However this should not be read as a deciding factor, particularly if the other indicators are positive.
If the report gives a credit history, look at the trends – are they improving or not?
More elaborate reports will show a profit & loss statement in addition to the above. This is very helpful because in itself it tells you if the company is being run well (in profit) or not (making a Loss).
Again it is helpful if you have several years' figures to look at, to see if there are any trends. A one-off loss in a past year could be just a hiccough but a trend of increasing losses is invariably bad news. In such cases look at the latest loss against the company's net worth (total assets less total liabilities) and see how long they could stay in business if the current trend continues. As always, look for trends in the past year's figures and be particularly wary if a string of positive balances is suddenly converted to a negative one.
If the Report shows it, look at directors' income and dividends paid. Sometimes a loss can be due to the shareholders taking out large sums of money from the business, absorbing the profits from the current year and, maybe, some of the profits from previous years.
Working capital is the difference between current assets and current liabilities. If it is a negative figure this means that, as a customer, the company is likely to want to take extended credit and, as a supplier, could explain why they want a significant "up -front" payment from its customers to help bridge that gap.
Company ratios, where shown, simply express the above information as percentages and the most important are the pre-tax margin (i.e. profit margin) and the net working capital as a percentage of current assets and liabilities. Both these should be positive if the company is healthy
A Full Report will also give details of the director(s) other directorships. This can be worth studying, particularly if you think that a director has been involved in another company that has ceased trading, or the other companies are being used as references.