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Businesses aren't checking up on their customers cor credit ratings and are risking bad debts as a result, says a new report from credit ratings agency Experian. Of course a credit ratings agency will have vested interests in pushing such a view forward but it's a genuine piece of bad practice. And many companies are doing it.

It's likely to be good data because the company spoke to 700 small business and found a striking 71% didn't check their customers' credit ratings before allowing them to do business. Even more surprisingly, 39% of small businesses didn't know what a credit score was.

Great unwashed


This is the great truth about small business owners that gets withheld or bypassed in so many surveys. A handful of people get business study degrees or otherwise prepare formally for setting up by themselves but that doesn't cover the millions of starters and entrepreneurs.

Most of them are doing what we call "winging it". They set up, they learn on the job and if someone is a poor credit risk they don't know anything about it. They also struggle to keep up with employment legislation and don't really know where to go for business advice, particularly since the demise of the Business Link offices.

It's this rather than any specific areas os business that needs to be addressed in the UK at the moment. Unemployment is high so a lot of people are trying to go it alone rather than sign on. I wish them every possible success. I'm concerned, though, that they're left a bit adrift when it comes to starting and then complying with good practice and current legislation.

My guess is that the credit score thing is just a symptom of a whole bunch of other stuff people don't realise they should be doing.

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