Credit checks for new business customers - a practical checklist

Opening a credit account means you are lending money, interest free, to someone you may barely know. A short, consistent set of checks before the first delivery is much cheaper than chasing a bad debt afterwards. This checklist is for UK limited companies. It uses free public information first, then adds paid and personal checks in proportion to how much you are exposed to.

1. Confirm who you are dealing with

Start with the Companies House register, which GOV.UK says is free to search. Check that:

• The company name and number match the customer's paperwork, quote and bank details.
• The status is live. Anything else, such as liquidation, administration or a proposal to strike off, means you should stop and read our guide to checking if a company is in trouble.
• The registered address and nature of business are consistent with what they told you.
• Previous company names are listed on the register. A recent name change is worth a question, not an accusation.

Also confirm the trading name and the legal name. Contracts and invoices should be in the legal name.

2. Look at the age of the company

The incorporation date is on the overview page. A company incorporated last month has no filing history for you to check, so you are relying on other evidence. An older company has a track record you can read. That does not make it safe: age is a comfort, not a guarantee (our view). Treat a very new company as higher risk for larger credit limits, and consider a lower limit, shorter terms or a deposit until it has a payment record with you.

3. Read the filed accounts, and know what they do not tell you

Every company must file annual accounts, but the amount of detail depends on its size. GOV.UK says a company is a micro-entity if it meets two of these: turnover of £1 million or less, £500,000 or less on the balance sheet, or 10 employees or fewer. Micro-entities can file only a balance sheet with reduced information. Small companies (two of: £15 million turnover, £7.5 million balance sheet, 50 employees) can choose not to file a profit and loss account or directors' report with Companies House. So the accounts may not show whether the business is actually making money.

GOV.UK also says that from 1 April 2028 micro-entities and small companies will have to deliver a profit and loss account to Companies House, although they can opt out of it being published on the register. Rules change, so check the current position.

What to look for:

• Net assets or liabilities. A negative figure means liabilities exceed assets.
• Cash and debtors versus creditors. Can they cover what they owe in the next year?
• Date. Accounts are due nine months after the year end, so they may be a year or more old. They describe the past.

A micro-entity balance sheet cannot tell you much about profitability. Use the accounts to set a sensible credit limit, not to prove financial health.

4. Check the directors and their other appointments

The register lets you search for a director by name and see their appointments (Companies House's API documentation describes an officer appointment list). You can also filter searches for disqualifications. Ask yourself:

• Has the same person been involved in other companies that were dissolved or went into liquidation?
• Are the directors newly appointed, or has there been a lot of turnover recently?
• Does the person on the register match the person you have been dealing with?

Be careful. People with common names can be confused with each other, and many perfectly good directors have had one business fail. A pattern is more informative than a single case. That is our judgement, not a rule, and you should never accuse anyone on the strength of a register search alone.

5. Get a credit report

Companies House says lenders, including businesses offering goods on trade credit, look at commercial credit information from credit reference agencies, which compile data from public sources such as Companies House. A report from an agency of your choice can add payment behaviour and scores that the free register does not show. We have not compared agencies or prices, so shop around and decide whether the size of the account justifies the cost. Registry Trust's TrustOnline service can also show county court judgments (a per-search fee applies).

6. Ask for trade references

Ask for two or three suppliers the customer buys from on credit. Contact them yourself using details you have found independently, not only the ones supplied, and ask how long they have traded, the credit limit, the terms and whether payments arrive on time. Trade references are a widely used practice, but we did not find a primary source describing them, so treat this as practical advice.

7. Set the limit and the terms in writing

Keep the first limit modest and raise it as the customer proves itself. Put the payment terms, including the due date, in your terms and conditions and on every invoice.

GOV.UK's guidance says that if no payment date is agreed, a business payment is late 30 days after the customer gets the invoice or you deliver the goods or service, if that is later. It also says statutory late-payment interest is 8% plus the Bank of England base rate for business-to-business transactions. You cannot claim it if there is a different rate of interest in a contract. You can also charge a fixed sum for recovery costs of £40, £70 or £100 depending on the debt size, once per payment. Clear terms of your own remove doubt about when a debt is due.

8. Consider a personal guarantee

A personal guarantee is a legally binding agreement that a director will personally repay a debt if the company fails to. GOV.UK says a director is responsible for company debts they have personally guaranteed. Because a limited company is a separate legal entity (our framing), a guarantee can give you a named person to pursue as well as the company. GOV.UK's director guidance warns that a guarantor's home, car and savings could be at risk, and says directors should take independent advice. Asking for one from a new company is a commercial decision, and it can put some customers off. Have a solicitor draft it, because a poorly drafted guarantee may not help you (our inference).

9. Keep monitoring

A customer that was healthy at onboarding can deteriorate. Recheck status, overdue filings and new charges from time to time, and act on late payments quickly.

Checklist

1. Company name, number and status match.
2. Incorporation date and previous names noted.
3. Accounts read, with type and date noted.
4. Directors and their other appointments looked at.
5. Credit report or references obtained, in proportion to the risk.
6. Limit and terms agreed in writing.
7. Personal guarantee considered.
8. Review date set.

Making it routine

Try our free Company check for a first look at any new customer. Once they are on account, you can watch up to five companies for free and be alerted when something changes on the Companies House register.

This guide is general information, not legal or financial advice.

Sources

• Searching the Companies House register (GOV.UK)
• Using the Find and update company information service (Companies House blog)
• Micro-entities, small and dormant companies (GOV.UK)
• Preparing and filing Companies House accounts (GOV.UK)
• Officer appointment list (Companies House Public Data API)
• Why filing your information on time with Companies House is important (Companies House blog)
• TrustOnline (Registry Trust)
• Late commercial payments: when a payment becomes late (GOV.UK)
• Late commercial payments: interest (GOV.UK)
• Late commercial payments: debt recovery costs (GOV.UK)
• Director information hub: Personal guarantees (GOV.UK)
• Director information hub: Understanding the difference between personal and company debts (GOV.UK)

Updated 30 September 2026 · All guides