Credit checks 'vital' in crunch, says ICAEW

Up-to-date credit checks are essential for surviving economic turbulence, an expert has warned.

The Institute of Chartered Accountants in England and Wales (ICAEW) sounded the warning to the UK's small to medium enterprises (SMEs) earlier this week.

A senior figure at the institute has advised all small firms to invest in credit checks to root out "bad apples".

Clive Lewis, head of SME issues at the ICAEW, said: "In the current credit crunch climate, customers' creditworthiness can change rapidly, so it has never been more important to ensure data on your customers is valid."

He added that the information obtained on a client is only of any use if it is up-to-date, due to the rapid nature with which credit information can change.

The ICAEW also recommends not delaying chasing clients for payment, as patience is a virtue many businesses cannot afford in the credit crunch.

Statistics from the Consumer Prices Index yesterday (14 October) revealed that inflation was running at an actual rate of 5.2%.