Most Companies Pay Well until The Day They Don’t

Many companies survive subject to the continued support of their bank - the day this support is withdrawn is the day you are left with a bad debt.

Unincorporated businesses do not have to register any accounts or indicators as to their strength or stability at Companies House and in any case, the time lag from the preparation of accounts to the date they are available to view has more in common with a history lesson than a credit evaluation.

Where trade references are offered, it is fair to assume that these will be from a preferred supplier and increasingly, companies are too busy looking out for their own credit control to worry about yours. The banks, ever mindful of our litigious society, have perfected a system of vague and incomprehensible phrases, all written for their client at your cost.

Given that background, surely the payment record of your debtors must be one of best reflections of a company’s cashflow position and ability to pay?

Certainly, in the absence of other financial data risk, underwriters are keen to obtain trading information, but this indicator is increasingly being questioned by the statistics from the insurers’ own claims departments. Suppliers of any importance are paid right up to the time the Administrators are called in.  

A credit insurer provides the invaluable service of an “early warning system” and can alert you to issues on a customer far sooner than would be the case for an uninsured company. A credit insured company is then provided with the opportunity of reducing their existing debt while their customer is still able to pay and making an informed decision as to whether they should continue to supply.