Checking the credit worthiness of a company is a crucial first step in determining whether to enter into any business relationship. Your small business is too important to leave such critical decisions to chance.
A partner’s ability to pay for services rendered, and a history of living up to their responsibilities and commitments must be learned in advance. Checking references, and checking them properly, will help you avoid the negative repercussions that come from working with financially or morally unsound partners.
Getting Business References
First ask for and receive written consent from the company you are considering partnering with. This is both a professional courtesy, and results in references providing greater quantities of more insightful information. They may be hesitant, and rightfully so, without a written document.
Obtain several references if possible, not just one or two. The more references you receive, the better able you will be to capture a complete picture of what a company is really like to work with. This can also help you to avoid receiving only references with good business relationships. Ideally, you want the opportunity to ask questions of those with a less than stellar history, too.
Additional Steps When Requesting Credit References
Be prepared prior to making the call. You should have a specific contact name and know what questions you want to ask; write them out if necessary. The discussion will be more productive, and a better use of your and the reference’s time. If the inquiring company has mentioned any professional or industry organizations they belong to, then follow up to make certain they remain in good standing. Groups such as the Better Business Bureau and local Chamber of Commerce are two of the more common ones to begin your search.
Accept only those references that have legitimate business emails and addresses. The use of generic emails such as Yahoo and Gmail or accounts, or P.O boxes can certainly be red flags. Taking a few moments to review the company’s website for references can also help you to get a better sense of the company.