The Better Payment Practice Group offers advice on understanding business credit ratings
The Better Payment Practice Group has added a new section to its website to help companies understand business credit ratings.

The BPPG recommends that companies incorporate credit vetting procedures into their standard credit management practices. This includes checking a potential customer’s creditworthiness before trading with them and then closely monitoring them throughout the business relationship to ensure that payment problems do not develop. One way of doing this is to apply for a status report from a credit agency. These include full customer details and financial results along with the payment experience of other suppliers, county court judgments registered against them and a recommended credit rating.

The guidance, which has been added to this site, explains what a credit rating is, how it is calculated and how businesses can improve their rating.

Stephen Lewis, member of the BPPG representing the Credit Services Association, commented: “Offering trade credit should be a carefully thought out business decision. It is not an automatic right. Obtaining a status report from a credit agency is one way of checking creditworthiness and if the potential customer has a poor credit rating, this should be a strong warning not to extend credit. Businesses can improve their credit rating, and their access to trade credit, by paying on time, keeping listings in information directories up to date and, for limited companies, ensuring that company registration details are accurate and that returns and accounts are filed on time.”

Full information on understanding business credit ratings can be found by clicking here.

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