XII. When you have considered these problems, express your thoughts in writing.

XIII. Asking about credit rating.

The following material will cover all possible questions as to how to take up references and to ask about a company’s credit rating.

Opening

Say who you are and why you want the information. Make it clear that the name of the company you are writing to has been given to you as a reference by your customer.

We are a furniture wholesalers and have been asked by L.R. Naismith & Co. Ltd. of 21 Bamsley Road, Sheffield to otter them open account facilities, with quarterly settlement terms. They have given us your name as a reference.

As you will see from the letter heading, we are a glass manufacturers and have recently begun to export to the UK. D.R. Mitchell & Son, who are customers of yours, have placed an order with us, but want to pay by 30-day bill of exchange, and informed us that you would be prepared to act as their referees.

Your branch of the Eastland Bank was given to us as a reference by 1. T.S. Ltd. who have placed a substantial order with us, but want to settle by 40-day draft. As we are a Yugoslav company, we have little knowledge of British companies sand their credit ratings.

Details

Say exactly what you want to know.

We would like to know if the firm is credit-worthy and has a good reputation. We would be grateful if you could tell us if the firm is reliable in settling its accounts promptly.

Could you let us know if this firm is capable of repaying a loan of this size within the specified time?

Could you tell us if the firm has a good reputation in your country; whether they can be relied on to settle promptly on due dates; and what limit you would place or have placed on credit when dealing with them?

If the amount of credit is known, it is usually mentioned.

The credit will be about £2.000.

We do not expect the credit to exceed £500.00.

The draft is for £226.00.

It is unlikely that they will ask for more than a £1,000 credit at this stage.

Closing

Thank the firm in advance for giving you the information, and tell them you will reciprocate if the opportunity arises. Also let them know that whatever they say in their letter will be treated in the strictest confidence.

We would like to thank you in advance for the information and can assure you that it will be treated in the strictest confidence.

Your help will be appreciated, and the information will be held in confidence. We will return the service should the opportunity arise.

You can be sure that the information will not be disclosed. Thank you for your assistance, and we will reciprocate in a similar situation in the future.

Using an Enquiry Agency

We have seen that banks and trade associations will usually only give brief references. Business associates may give more information. An Enquiry Agency will give much more detail about a firm's activities, and for a fee, will research the firm's financial background, its standing, credit-worthiness and ability to repay loans or fulfill obligations. When writing to an Enquiry Agency, therefore, you can ask for more.

We have been asked by D.F. Rowlands Ltd. of Milton Trading Estate, Peterborough, to allow them a credit of up to £5,000 in allowing them to settle by quarterly statements. As we have no knowledge of this firm, would it be possible for you to give us detailed information of their trading activities over, say, the past three years?

The firm named on the enclosed slip has written to us asking if we would allow them to settle by 60-day bill of exchange. Our trading with them so far has only been up to £500.00. But as we know nothing about them or their credit-worthiness, would it be possible for you to investigate their business activities over the past few years and give us a detailed report?