How to Do a Company Credit Investigation Effectively?

Nowadays, it’s necessary for all the business man to do a credit investigation/inquiry in order to get a comprehensive understanding of the company which you are going to cooperate with.

Individuals aren't hesitant to approach the banks and monetary establishments for the aim of availing some types of finance. underneath such circumstances, the banks and monetary establishments are in a very position to require utmost care in judging somebody for the aim of obtaining eligibility for a loan.

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There are 5 easy and inexpensive steps to investigating your customer’s credit.

1. Collect Information and Get Permission

Before you can investigate your customer, you need to get some basic data, such as their business name, contact information, bank and trade references. Normally this is done on a credit application. Typically this is a one or two-page document that your customer fills out, signs, and returns. The credit application will include language to give you permission to check their credit.

If you don’t have a credit application, you can find samples on the Internet by searching for credit application templates or forms. The credit app can be used to set legal terms to protect you in the event that your customer does not pay on time.

2. Confirm Legal Name of Business

It is important to know the legal entity you are actually dealing with. This can be easily checked online for free. All states have Secretary of State websites where you can search for “business entity” or “business name” to confirm the exact legal name of corporations, LLCs (limited liability company), and partnerships. If the name you check doesn’t come up in the search, ask your customer if they have a different legal name or are registered in a different state, which you can then verify.

3. Run A Business Credit Report

A typical business credit report will tell you if your customer has outstanding judgments or tax liens for unpaid bills. You should be concerned about getting paid if they aren’t paying others. You can get reports from many web’s which are various of internet. The cost can range from $8 to $188 for an individual report, or as low as 3 cents each with a subscription. Reports can include information on how your customer pays other vendors and a credit risk rating.

4. Check Trade References

Contact the vendors that your customer named on the credit application. Ask how long they have done business together, the maximum amount of credit they have extended in the last year, and the average amount of time it takes for the customer to pay. You may also want to ask separately if they have been late on any invoices during the last 6 months.

5. Check the Bank Reference

Banks won’t tell you much, but they usually confirm when the account was opened and the approximate average balance. You may want to specify that you are seeking the average balance during the last 6 or 12 months. The banks will ask to see whether you got permission from your customer to release information.

Once you have a process in place, it should take 15 minutes or less to check a company’s credit.  That’s a small investment to dramatically reduce the chances of not getting paid.

How to get a reliable and professional investigation on Chinese suppliers?

eGTCP.com offers free credit reports to clients to help avoid trade risks.

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Unilateral Action Could Spur Trade War

Last week, an article said that President Donald Trump has directed the U.S. trade representative (USTR) to determine whether to investigate into China's trade practices, Washington may take unilateral moves harming China-U.S. trade and economic ties. Around this event, "No one can force China to obey other countries in conducting trade activities." Experts say.

The US rule being used to look into Beijing's trade practices is too out of date to provide effective measures to relieve its trade deficit with China, and international trade friction can never be solved through unilateral acts, senior experts from both countries said.

The US trade representative initiated the investigation on Friday under Section 301 of Trade Act of 1974, examining China's intellectual property policies and practices. That came just four days after President Donald Trump signed a memorandum authorizing the trade representative to determine if an investigation was necessary.

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The move by the United States signals that the current bilateral economic and trade relations are "at a crossroad", said Wei Jianguo, vice-president of Beijing-based China Center for International Economic Exchanges.

"China needs to prevent the Trump administration from replacing the bilateral, multilateral and global trade rules with unilateralism on trade," the former vice-minister of commerce told China Daily on Sunday.

Wei said the "Cold War mentality" of the US is dangerous. "It will result in global trade recession and chaos," he said.

"The trade imbalance is caused by the distribution of the global value chain and the differentiated industrial structure," said Bai Ming, a researcher with the Chinese Academy of International Trade and Economic Cooperation in Beijing.

Bai said the labor in the US costs more than in China, therefore it does not have an advantage in manufacturing to compete with China, but it has a notable edge in high-tech products and service trade with China.

"Such unilateral trade sanctions on China will not stop the progress of globalization and such action will only weaken the ability of companies to earn in both countries," said Bai. "No one can force China to obey other countries in conducting trade activities."

China has warned the US of its actions after Trump signed the memo last week. The Ministry of Commerce responded on Tuesday by saying China will take all necessary and appropriate measures to protect its commercial and trade interests if the US wrongly accuses China of theft of US technology and intellectual property.

Foreign Ministry spokeswoman Hua Chunying said last week that "any member of the World Trade Organization should observe its rules in taking trade measures".

"Given the increasingly converging China-US interests and the close-knit pattern of the two countries being mutually dependent, there will be no future or winner but only losers in a trade war," she warned.

How will the event evolve and what is the future of trade between US & China? We can only be sure of China’s abidance by the world trade rules and standards and its unwavering stance in defending proper national interest.

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