Credit checking your customers and setting credit limits

If you don't know a potential customer's credit history, there is a risk of being paid late or not being paid at all.

You should ask all potential customers to complete a form authorising you to get bank, credit and trade references.

The form should include:

• The full name of the customer's business and any other names it trades under.
• Details of who owns - and who runs - the business.
• The legal status of the business, eg sole trader, partnership, limited liability partnership, public limited company. For more on the various legal structures, see legal structures for businesses - an overview.
• Registration number - if it's a limited company.
• How much credit is being asked for.
• Full contact details of the person responsible for payment queries.
• Delivery and invoice address if different.
• Bank account details.
• A request for consent to make bank reference checks.
• A request for consent to get a credit check from a credit reference agency.
• A request for consent to get at least two trade references.

You should then make the necessary checks with the customer's bank, a credit reference agency and their suppliers.