A new customer asks for a large order, wants thirty days to pay, and is pleasant on the phone. You deliver. Sixty days later the invoice is still open, the phone is no longer answered, and the company turns out to have changed its name twice in two years.
Most customers pay. The few who do not are rarely obvious in advance, and for a small company one unpaid invoice can take a month of margin. A short check before the first order costs a quarter of an hour and removes the worst surprises.
When a check is worth doing
Not every sale needs one. Ask two questions: how much will we deliver before we are paid, and could we afford to lose it?
- Small first order, paid in advance or by card: no check needed. You carry no risk.
- Moderate order on invoice: do the short check below.
- Large order, long project or many months of invoices: do the short check, then consider a deposit, staged payments or a lower limit at the start.
Write the threshold down once, for example "any first invoice above a set amount, or any customer who asks for more than 14 days". Then nobody has to argue case by case.
What to look up
Fifteen minutes and public sources are enough. The aim is to answer three questions.
- Does the company exist as described? Find it in the official company register of its country. Compare the legal name, registration number, address and status with what the customer gave you. A different name on the register than on the email signature needs an explanation.
- Who stands behind it? Note the owners or directors if the register shows them, and how long the company has existed. A company founded last month is not bad, but it has no history to rely on.
- How does it treat other suppliers? Search the company name together with words like "late payment" or "insolvency". Check whether the register shows insolvency or liquidation proceedings. Where your country has a public debtor list, look there too. Ask the customer for one or two supplier references and actually call one.
Also check small practical signs: a working website, a real address, an invoice email that belongs to the company's own domain, and a contact who can explain what the order is for.
Keep the result short. Four lines are enough: what you checked, the date, what you found, and your recommendation.
What the result means
Sort the customer into one of three groups, using plain rules.
- Clear. Company exists, normal history, no warning signs. Offer your standard payment terms.
- Unclear. Very new, little information, or one open question. Start with a limited first order, shorter terms, or a deposit.
- Warning. Insolvency notice, a name that does not match, or a reference that speaks badly of them. Ask for payment in full in advance, or decline politely.
When to ask for a deposit
A deposit is the simplest answer to uncertainty. Ask for one when the check is unclear, when the order includes custom work or bought-in material you cannot resell, or when the amount is large compared with your monthly revenue.
Say it as a rule, not as a judgement of the person: "For a first order of this size we work with a deposit of a third, and the rest on delivery. After the first order we are happy to move to standard terms." Most serious customers accept this at once, because they use it themselves. The same logic applies to cancellations, deposits and no-shows, which you may already have in writing.
Other tools work too: a lower credit limit for the first months, payment on delivery, or splitting a project into stages that are each paid before the next begins.
Who decides
Name one person. Often the person who owns the relationship wants the sale, so they should not be the only one who decides on risk. In a very small company, the owner decides; in a larger one, give it to whoever approves invoices or manages cash.
The rule that helps most is simple: the salesperson may recommend, but any exception to the standard terms is approved by the named person, and the approval is written in the customer record in one line. Later, when someone asks why this customer got sixty days, the answer is on file.
After the first order
The check is not a one-time stamp. Review the customer after the first two or three invoices. If they paid on time, move to standard terms and note it. If they paid late, keep the shorter terms, and use a calm reminder routine from the first day. Repeat the quick look when a customer suddenly asks for a much bigger order than before, because a big jump is a moment when risk changes.
A simple start
- Set the threshold: which first orders get a check.
- Make a four-line check note template: what you looked up, date, finding, recommendation.
- Write the three groups and what each one gets: standard terms, deposit, or advance payment.
- Name who approves exceptions.
- Run it on the next three new business customers, and measure how long it took.
If the check takes more than twenty minutes, your template asks for too much. If it never changes a single decision, your threshold is too low. Adjust once after three customers and then leave it alone.