Research carried out by Experian reveals that Small and Medium Enterprises are not aware of credit scores, their own or customers. The study by Experian surveyed 700 businesses in the UK, only to discover that an alarming 71 percent of businesses don’t check the credit scores of their customers. This puts them at an increased risk of not being paid, or being paid late.
Surprisingly, 39 percent of businesses have no idea what a credit score is, and 61 percent have no idea what their own credit score is. According to Experian, a business may never bother to check their credit score unless they experience difficulty obtaining credit, fail to secure a contract or aren’t given the materials necessary from new suppliers. A low credit score isn’t always due to financial stability. It could be due to an absence of information about the company being held on the system, or even missing or inaccurate information which is held.
A credit score which is low could have an adverse effect on a business, resulting in restricted trading terms with suppliers, or failure to get new customers and being refused finance. As small businesses are reliant on a restricted group of customers and suppliers, a change in supplier’s terms or losing custom may have a negative effect on a business. Experian’s managing director of UK SME business, Simon Streat said:
“It is important for businesses to monitor their credit score on a regular basis to ensure it reflects their situation accurately and to be able to take action to resolve any issues that are highlighted.”
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