How to Check a Customer's Credit Worthiness Know the risks and what to ask before extending credit to your customers.
By Gwen Moran Edited by Frances Dodds
Opinions expressed by Entrepreneur contributors are their own.
Before banks extend credit, they verify the prospective borrower's credit history and ability to repay, among other things. That's not as common in the $2 trillion unsecured, or trade, credit market, says Alex Coté, vice president of marketing for Cortera, a credit-risk monitoring service in Boca Raton, Fla.
"I recently spoke with a woman whose business was running into trouble because she wasn't monitoring her customers' payments," he says. "Everything was very late--60 days or more. She didn't realize it. They were looking at layoffs and, really, the problem was that they weren't collecting."
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