Granting a company the right to pay for a service or product
at some time after you have delivered the service or product involves a risk
that the company will not pay what is due.
Resources on the Internet might help you in assessing the credit worthiness
of that company and help you decide on whether selling to that company is a
good idea.
This blog identifies some of these resources. Some of the resources do not require a fee
but others do. All involve in some way a
database with historic information related to the company. Such historic information is useful for assessing
the credit worthiness of the potential customer.
The expense of using these resources, in terms of your time
plus any fees, probably can be kept to less than two to three hundred dollars
per customer, perhaps much less. This seems like a small price to pay to weed
out potential non-paying companies when the cost of the service or product to
you is high enough.
What follows is a suggested sequence of using the Internet
to obtain information on a company and its credit worthiness.
Maryland, and probably most other states, offers access to Maryland-registered
company information from its websites.
At this Maryland site (click here), information can easily be found on
such things as when the company was formed, the value of personal property
(based on personal property tax returns), and whether the company is in good
standing for paying it personal property tax.
Also from this site, a search of UCC filings will show those filed
against assets owned by the company.
These filings might be useful in evaluating the debt status of a company
and perhaps how others view the credit risk of the company.
Also in Maryland, and probably other states, you can search for the real (land and structures) property a
company owns and the value of that property as assessed for real property tax
purposes (click here to go to the site where a search can be made).
The American Bankruptcy Institute has a site (click here)
apparently still being developed (i.e., in beta status) that will search several
databases simultaneously for bankruptcy and other legal news related to the company
of interest. Knowing that a company has
gone through bankruptcy, and/or other legal proceedings, can be useful in
evaluating the credit worthiness of the company.
The United States Government maintains the PACER (Public
Access to Court Electronic Records) system (click here to go to this system’s
website). At the site, you can search US
court cases that a company has been involved in. Fees do apply. Court cases can provide insights into a company’s
financial and other transactions.
Experian (click here), Equifax (click here), and TransUnion
(click here) offer reports on small businesses that assess the credit worthiness
of the businesses. Fees for basic
reports range from $35 to $100, and more.
D&B (Dun & Bradstreet) offers reports starting at
$62 that provide information on a
company’s payment history. Click here for details.
LexisNexis, which maintains or has access to large numbers
of databases, offers a small business credit risk service based on LexisNexis
use of those data bases (click here to go to the service). LexisNexis also offers a service that will
search not only state records of UCC filings but also state records showing
state tax liens against companies, another indicator of a company’s ability or
willingness to pay on time (click here to go to the service) .
Spending some time, and in some cases fees, using such
Internet resources as identified above could fine risks associated with the
credit worthiness of a company, and help you decide on whether you want the
company to be a customer.
