Guest Blog: Credit Check and Due-diligence Explained

Credit checks are vital in finding out who you are doing business with and should never be skipped. 

The aim of a credit check is to help you assess the financial security of a company, and/or its Directors in order to make an informed decision on the level of financial risk. Further to this, you will also be able to determine how likely the client will be able to pay on time and therefore what credit terms to offer, or perhaps avoid doing business altogether.   

Soft credit checks

A ‘soft’ credit check will include finding out:    

• when the company was incorporated;
• what arrears it has with other creditors;
• if there have ever been any County Court Judgements against the company;  
• when the last set of accounts was submitted to Companies House; and
• an overview of how solvent they are. 

This basic credit check is the very minimum you should do when considering offering credit to a new client. 

Director checks

Sometimes, when a credit check on a company does not give you the full picture, perhaps because a company is newly established, or is overseas, rather than not do business and lose out on what could turn out to be a profitable relationship, we can also assist you in undertaking checks on individual Directors and where necessary advise and assist you on putting in place a ‘Director Personal Guarantee’. This includes providing you with the document templates required.   

A standard search on an individual Director will include:

• personal details;
• a history of previous company directorships;
• live directorships of other enterprises (trading and non-trading);
• any resigned directorships; 
• any dissolved companies; and

If they were previously disqualified or bankrupt.

This is a guest blog from AR Legal - REC's approved debt recovery service provider. 

AR Legal offer to REC members

As part of our offer to REC members, we will carry out a complimentary soft credit check on your behalf, on your potential new clients(s) before you extend credit to them. For more information on credit and due-diligence checks, a free consultation or just a general discussion, please contact us on +44 (0)20 8202 0730. 

AR Legal Collections Ltd offer a “no collection, no fee” debt collection service with no upfront payments required. Clients only pay a percentage of the debt recovered and only when it has been recovered. AR Legal are pleased to offer REC Members a reduced rate on all debts recovered. 

To unlock these members-only benefits from REC accredited partners, contact our team today.