If you're credit checking your customers who are making smaller value-transactions, there's a strong chance it isn't cost-effective going down the credit-checking route, even on the Internet, to verify them.
But there is another way of checking customers, and it needn't cost any money. The answer may lie in trade associations relevant to your industry sector.
Building on the fact that the Companies House Website now provides a free, if basic, Webcheck service for smaller firms, allowing other companies to verify their details, a growing number of trade associations are circulating members with details of `bad-uns' in their sector who owe members money.
Richard Jones, managing director of the Safebuy `seal of approval' and Web retailer mediation scheme, which has been running for five years, says a number of his members now use these trade associations to great effect, especially as they are free to use.
"Our members tell us that postcode checks are very popular, as it allows them to assess the risk associated with dealing a consumer or trading partner in a given area," he said.
Jones says that a small firm's reliance on any form of customer or trading partner checking service will vary depending on the area of business they are in.
"A bookshop, for example, would not normally have any major problems with any of its customers or trading partners, whereas, if you were in the electronics business, you would definitely want to know whether the firm you were selling #1,000 TV systems to was potentially dodgy," he explained.
Interestingly, when he first set up Safebuy some five years ago, Jones saw the association as a mediation service between members of the public and the Web retailers.
Five years down the pipe, Jones' says his experience suggest that Web retailers are a relatively honest bunch, but some members of the public are - shall we say - out for all they can get.
"Smaller Web retailers, like all small firms, need every help possible to grow and protect their young businesses. Checking customers, whether on the B2B (business to business) or B2C (business to consumer) side, is a vital business tool, he says.
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By: Steve Gold, guest blogger.
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