How to credit check
a company, step by step

Five steps, in order, for any England & Wales company you are about to extend credit to. Each step takes minutes with free tools, and each one answers a different question. Skip a step and you are guessing.

Step 1: Confirm the company exists and is active

Start with identity. Search the company name or number and confirm three things: the registration number matches the invoice, the status is active, and the registered address is a real trading address, not a formation agent's desk. A company that is dissolved, in administration, or proposed for strike-off cannot reliably repay you. This check takes one search and stops most obvious losses before they start.

Step 2: Read the last set of accounts

Accounts tell you whether the business generates money or burns it. Look at three numbers before anything else: net assets (positive or negative), cash (can it pay tomorrow's invoices), and the trend across the last two or three filings. A profitable company with no cash is still a risk. Late or missing accounts are themselves a signal: companies that stop filing are often companies in trouble. Filing history matters as much as the numbers.

Step 3: Check for judgments, petitions and insolvency events

This is the step most people shortcut, and it is the one that catches failures. A County Court Judgment means a court has already decided the company owes money it has not paid. A winding-up petition means someone has asked the court to shut the company down over an unpaid debt. Both are public record, both are serious, and both change the answer from "how much credit" to "whether any credit". Overdue accounts and gazette notices belong in the same look.

Step 4: Check the people behind it

Directors leave a trail. Are they officers of other companies, and did any of those fail? A director with a string of dissolved, indebted companies behind them is a pattern, not a coincidence. Appointments, resignations and resignations of accountants all tell you how the company is run. This step takes the longest but separates the honest failure from the repeat offender.

Step 5: Set the limit, the terms, and the review date

Now decide. Set a credit limit you could lose without pain, payment terms that reflect the risk, and a date to check again. A credit check is a snapshot, not a verdict forever: companies that were solid at onboarding cause most bad debts a year later. Put the review in the diary, or use a watchlist and let the register tell you when something changes.