How well do you know your customers?

We’ve all been there. You secure a new client – that rush of excitement follows. New business, the lifeline of sales!

But how well do you know your customers? Have you done your due diligence? Collecting the essential pieces of information are vital to ensuring a successful, long-term relationship. The challenge comes in ascertaining the information without having an awkward conversation. For example, how do you know if your new client will be late payer – it is not the sort of question to ask, unless you want to lose them before you even start!

A simple way around this is by having a “new customer onboarding form”, before you either fulfil their order or start offering services. The information gathered will reduce the level of risk to your business. You will be able to establish if your new customer has the means, (and intention) of paying you. It will also avoid unnecessary time should you, (unfortunately), have to chase payment. Here we offer some suggestions as to the kind of information you should gather.

• Trading name

Be sure to distinguish between the registered name of a business and the trading name (if they have one, for marketing purposes). If your customer is a sole-trader, all your documents should state the customers name, trading as their business name.

• Registered business name

This is the official name of the company, ie XZY Limited, which should you should use on all formal communication (HMRC, Companies House etc). If the worst happens and you have to chase an outstanding debt, this piece of information is absolutely vital. Check on Companies House – this is where you will also find the registration number and address.

You should list the company name on your documents exactly as the name is written on Companies House. So if the name says Limited, write ‘Limited’, not LTD.

• Type of business

Understand if the business is a sole trader, partnership or limited company. This will guide you as to the responsibilities of both the company and any Directors (remember to get contact information for the directors and the department that pays your invoices too).

• VAT details/number

Another way of establishing that the business you are engaging with is genuine, request the VAT number.

• Decision maker(s)

Who you make the invoice out to may not be the person who pays the invoice. This also applies to who places the order. By separating this information out on the form, you can then greater understand the internal processes of your new client.

The last piece of information to include with your form is Terms & Conditions, (outlining credit period/policy and right to charge interest on overdue invoices). Ensure that they have been read, understood and accepted by your new client.

As another additional step you may wish to conduct a credit check* on your new client. Depending upon the results, you can then decide:

• If you wish to accept their business
• Ask for pre-payment
• Offer reduced payment terms (14 days instead of 30)

*To do this, you need to obtain authorisation from your potential client and it can be achieved by asking them to complete a credit application. This may well be different from your Onboarding Form.

With both parties being open and transparent from the outset, it provides the foundation for a strong, positive working relationship in the future. If the information is not forthcoming from them, it might be time to ask yourself a question – What are they hiding?

You may be worried about asking the above questions, but you shouldn’t be. Taking your customer through a formal onboarding process document looks a lot more professional than not doing.