The Benefits of Knowing Your Clients’ Financial Situation

by News Guy on September 26, 2012

Being aware of a client’s financial history can have an enormous impact on the business choices made, both short and long-term. Various areas of a business can be positively or negatively affected by the credit history of a particular client and these numbers can have a far-reaching impact on the integrity and success of a company.

Discuss the reasons why it is important to know your clients financial situation

A company’s sales teams are driven by the need to meet targets for the month or quarter, leading them to sign-up customers that may not have the best financial background. The finance department, by contrast, is motivated to improve the profit margin by minimising the level of bad debts held by the company.

Human resources may also benefit from being able to learn about a prospective employee’s financial history. This can help them determine if the person is a good choice, as well as enabling them to find out whether a new senior appointee is as skilled in handling successful companies as he or she claims to be.

Running a supplier’s financial information and credit history can help a business identify which suppliers are more stable and therefore more likely to perform as promised.

The marketing department will also benefit from having access to financial information, screening prospective clients and determining beforehand if they are able to pay for products or services, both now and in the future. Using this type of credit information also helps marketing focus in on organisations and areas that are worth targeting.

Reviewing company credit reports

One of the most important aspects of reviewing a client’s financial information is the business credit report. This record of a company’s credit history and score provides detailed information about its financial history, as well as whether or not the company is stable and operating efficiently.

One item that will have a positive impact on the business credit report is that the company is operating as a separate financial entity from its owner. Sole proprietorship may seem ideal, but by incorporating or creating a partnership, the business owner will be able to ensure that positive information about the company finances will reach the media.

Common credit firm complaints

Many credit firms are contacted by businesses that have been let down by their suppliers or customers in one way or another. For companies such as Creditsafe, complaints are the starting point for gathering information and intelligence about the financial workings of a business or client. This information is provided to customers, both companies and individuals, who want to know which companies pose the highest risk.

Typical examples of the types of complaints that companies like Creditsafe receive include; an inability for a business to pay bills, purchase production materials, pay employees or meet tax obligations; lack of expansion of the business; failure to meet its obligations to its customers and suppliers and having to lay-off employees or even shut down for a period of time.

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