One of the biggest risks to any small business isn’t a lack of customers—it’s doing business with the wrong ones. Extending credit or entering into agreements without assessing a client’s financial reliability can result in late payments, unpaid invoices, and serious cash flow issues.
In this guide, we explore how to evaluate a client’s reliability, conduct a business credit check, and use other tools to make informed decisions that protect your company from bad debt.
Why Assessing Client Reliability Matters
Avoiding Financial Disruption
Every late or missed payment affects your ability to pay your suppliers, staff, and ongoing expenses. A proactive approach to client reliability helps avoid these disruptions and supports smoother cash flow.
🔗 Related: 5 Strategies to Maintain a Healthy Cash Flow & Avoid Bad Debt
Building Safer Partnerships
Reliable clients form the foundation of lasting business relationships. By thoroughly assessing a client before entering into a contract, you increase your chances of building long-term, mutually beneficial partnerships.
Step 1: Conduct a Business Credit Check
Choose a Reputable Credit Reporting Agency
Use platforms such as:
Experian Business Credit Reports
These services offer detailed reports that include:
✔️ Company credit score
✔️ Payment history and overdue accounts
✔️ Financial performance and director history
✔️ County Court Judgments (CCJs)
How to Read the Report
Look for the following indicators:
A low credit score or recent drop in score
Frequent late payments to suppliers
High debt-to-credit ratios
Legal actions or judgments filed against the business
If you spot multiple red flags, it may be safer to request payment upfront or revise your payment terms.
Step 2: Review Trade References and Business History
Trade references can provide real-world insights that data alone might miss. Ask for references from previous suppliers, partners, or customers and follow up with specific questions:
Have they paid on time?
Were there any disputes or irregularities?
Would you work with them again?
💡 For more due diligence tips, see: What to Do When Payments Are Delayed: A Step-by-Step Guide
Step 3: Analyse Financial Statements (If Available)
Where possible, request or search for recent financial statements:
Balance sheets show the client’s assets vs liabilities
Profit and loss statements indicate how well the company is performing
Cash flow statements reveal how they manage their day-to-day operations
Public limited companies must file annual accounts with Companies House—a free and invaluable source of financial data.
Step 4: Use Payment Review Platforms
Will They Pay allows businesses to share and view client payment behaviours based on real-world B2B experiences.
By using Will They Pay, you can:
✔️ Review verified payment behaviour from other businesses
✔️ Add your own client reviews to improve transparency
✔️ Identify consistent late payers across your industry
🔗 Related: Leveraging Payment Review Platforms for Business Insight
Step 5: Monitor Continuously, Not Just Once
Client reliability isn’t static. Reassess your existing customers:
Every 6 to 12 months
After a missed payment
When renewing or renegotiating a contract
Set alerts through credit platforms like Creditsafe or Experian to track changes in their credit profile or payment trends.
Legal and Ethical Considerations
Data Protection and Consent
Always comply with the UK GDPR. If you’re collecting or storing financial data on individuals (e.g., sole traders), ensure you have lawful grounds to do so.
Avoid Discrimination or Assumptions
Make sure your decisions are based on verifiable data—not gut instinct or hearsay. A transparent, consistent approach builds trust and protects your business legally and reputationally.
Conclusion: Trust but Verify
Assessing client reliability is an essential part of risk management for any business. By combining credit checks, trade references, financial reviews, and reputation tools like Will They Pay, you can make informed decisions that safeguard your finances and improve your client relationships.
Additional Resources
Will They Pay – Payment Transparency for Businesses
