When it comes to B2B, there is usually a culture of mutual understanding between different businesses and clients, stemming primarily from the fact that they are both businesses. This is why many B2Bs make use of a “purchase on account” option on their online stores. However, while offering credit in this way is a fantastic way to attract clients and build up a continual relationship with them (which is always the goal in B2B), it can make certain businesses nervous about payment defaults. This is especially as the sums involved are typically much larger than B2C transactions.
Payment defaults on B2B orders are a sure way to land a business in trouble. Even invoice factoring, a very useful service for cash flow trouble when inc
When it comes to B2B, there is usually a culture of mutual understanding between different businesses and clients, stemming primarily from the fact that they are both businesses. This is why many B2Bs make use of a “purchase on account” option on their online stores. However, while offering credit in this way is a fantastic way to attract clients and build up a continual relationship with them (which is always the goal in B2B), it can make certain businesses nervous about payment defaults. This is especially as the sums involved are typically much larger than B2C transactions.
Payment defaults on B2B orders are a sure way to land a business in trouble. Even invoice factoring, a very useful service for cash flow trouble when incoming funds are assured by an invoice, will be no use here, simply because the invoice itself isn’t paid. fastFACTR, an invoice factoring for small business service, says that many B2B businesses make profitable use of their services and manage to assure the payment of the invoice. How do they do this? They do this by not just selling to any old company.
Building a Relationship of Trust
Things can change suddenly and any B2B business will surely take that into account when dealing with a client. However, such changes can actually be forecasted by using a method that inputs the necessary data regarding external influences. With this accounted for, the relationship remains profitable on account of the simple principle that a client who has been paying on time for a while can be expected to continue to do so. The goal for any B2B business is to get to this position with their clients as soon as possible. But what can be done before a relationship of trust like this has been built up?
In such situations, it might seem like the best option is not to offer new clients credit options, but this isn’t really feasible. For one thing, everybody else is doing it and the “pay on account” option is a terrific way to make your B2B business more attractive to new clients. Rather, the solution is to do a credit check.
What is a Credit Check?
A credit check is an examination of the creditworthiness of a business partner (or a potential business partner). These credit checks are normally carried out before any contract is concluded and they examine many details of the company that could be relevant to their ability to pay debts. Naturally, therefore, the previous credit history is looked at, but so too is data from external credit agencies who may have dealt with the client in the past. The quality of the management is also examined as far as is possible. Such credit checks are carried out either by the creditor or by a third party, but always at the instigation of the creditor.
Advantages of a Credit Check
The biggest advantage is that a credit check allows that relationship of trust to get off on the right footing and to develop from there. Nevertheless, do note that the credit check can be ongoing as the relationship develops. It also allows the client company to improve their credit rating to any external observers. Furthermore, it allows for thorough financial planning and projection on the part of the creditor company.
Beyond even this though a credit check simply allows that “pay on account” option to be offered with peace of mind. Having this option makes B2B businesses look like they go the extra mile for their clients. And you should go that extra mile, but only if you know who you are going with.
oming funds are assured by an invoice, will be no use here, simply because the invoice itself isn’t paid. fastFACTR, an invoice factoring for small business service, says that many B2B businesses make profitable use of their services and manage to assure the payment of the invoice. How do they do this? They do this by not just selling to any old company
Building a Relationship of Trust
Things can change suddenly and any B2B business will surely take that into account when dealing with a client. However, such changes can actually be forecasted by using a method that inputs the necessary data regarding external influences. With this accounted for, the relationship remains profitable on account of the simple principle that a client who has been paying on time for a while can be expected to continue to do so. The goal for any B2B business is to get to this position with their clients as soon as possible. But what can be done before a relationship of trust like this has been built up?
In such situations, it might seem like the best option is not to offer new clients credit options, but this isn’t really feasible. For one thing, everybody else is doing it and the “pay on account” option is a terrific way to make your B2B business more attractive to new clients. Rather, the solution is to do a credit check.
What is a Credit Check?
A credit check is an examination of the creditworthiness of a business partner (or a potential business partner). These credit checks are normally carried out before any contract is concluded and they examine many details of the company that could be relevant to their ability to pay debts. Naturally, therefore, the previous credit history is looked at, but so too is data from external credit agencies who may have dealt with the client in the past. The quality of the management is also examined as far as is possible. Such credit checks are carried out either by the creditor or by a third party, but always at the instigation of the creditor.
Advantages of a Credit Check
The biggest advantage is that a credit check allows that relationship of trust to get off on the right footing and to develop from there. Nevertheless, do note that the credit check can be ongoing as the relationship develops. It also allows the client company to improve their credit rating to any external observers. Furthermore, it allows for thorough financial planning and projection on the part of the creditor company.
Beyond even this though a credit check simply allows that “pay on account” option to be offered with peace of mind. Having this option makes B2B businesses look like they go the extra mile for their clients. And you should go that extra mile, but only if you know who you are going with.