How do you credit check a company before trading?
Business Credit Reports
Answer
Identify the company by country and registration number, obtain current company information, then review its financials, credit assessment and available payment evidence against the proposed transaction. Include existing unpaid exposure and goods already committed. Record your decision, conditions and review date. Use a manual review where information is missing or inconsistent.
Resolve the entity before evaluating the risk
Use the company legal name and its country of registration. Where possible, match a registration number to the contract and invoice. A VAT identifier or website can help, but should be reconciled to the registered entity rather than treated as proof on its own.
- Check status and recent filings.
- Confirm whether accounts cover the entity or a consolidated group.
- Compare the assessment date with the proposed transaction date.
Make the credit decision specific to your exposure
Consider open invoices, committed deliveries and the proposed order without double counting. Then review the company’s ability to meet that exposure, your payment terms and any valid security or insurance. Route policy exceptions to a named approver.
Illustrative example
A small new order can create a large total exposure
Illustrative scenario: £60,000 is already invoiced, £20,000 has shipped but is not invoiced, and a new £30,000 order is proposed. Peak exposure would be £110,000 before receipts. Assess that amount rather than the £30,000 order alone.
What to check
- Country and registration number
- Financials and assessment dates
- Total projected exposure
- Approval, conditions and monitoring
Frequently asked questions
Which identifier is best for a company check?
A country-specific registration number usually provides a stronger starting point than a trading name.
Can I search by VAT number?
Where supported, yes; reconcile the result with the legal entity and registration details.
Should I check before the first order?
Yes, before committing credit or a material supplier dependency.
Is the recommended limit an approval?
No. Apply your own policy and confirm what exposure the provider’s limit represents.
What if a company has no financial statements?
Treat the gap explicitly and request proportionate alternative evidence or protective terms.
Should I include unbilled deliveries?
Include committed exposure your policy recognises, without counting it again as an invoice.
Can I rely on a previous report?
Check its dates and whether company circumstances or your exposure have changed.
Does a credit check include sanctions screening?
Do not assume so. Confirm screening coverage separately.
What should I save?
Save identifiers, source dates, the assessment, exposure calculation, decision and approval record.
When should I repeat the check?
At policy review dates and when material events or exposure changes occur.
Sources & further reading
Source references support the definitions. Process suggestions and examples are editorial guidance.
- Companies House: get information about a company
Official UK company information and the records available from the register.
- UK Cabinet Office: supplier economic and financial standing
Public procurement guidance on assessing and monitoring supplier financial capacity.
Business Credit Reports provides commercial company information. Apply your organisation’s policy and appropriate specialist review. Suggest a correction.
For more detail: How to read a business credit report →
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