Conduct a Credit Health Check Before You Invest

Before you sign on the dotted line, make sure the business or franchise you want to buy has a clean record.

Conduct a Credit Health Check Before You Invest

So you’ve done the homework and you’re ready to buy a franchise or invest in a business opportunity. You’ve researched the credibility, performance and management of the company.

You’ve sussed out the competition. You know all the costs and obligations on both sides. But have you checked the credit of the seller? Rob Campbell, sales and marketing director at KreditInform, explains why a credit report is a no-brainer when it comes to making the decision to invest in a business.

Why is it advisable to obtain a credit check before investing?

A business credit report provides a snapshot of everything you need to know about the credit status of the business. This includes adverse information about the company such as reputational damage arising from late payments.

It’s advisable to have this information at hand before you make any decisions, as a poor credit record may mean that you will not easily find suppliers for the business.

Do you have to get permission before requesting a credit report?

Permission from the business owners is required to investigate a business with a turnover of less than
R1 million. All other companies are governed by the National Credit Act and consent is not required.

What types of reports are available?

A variety of reports are available, from detailed analyses to basic information.

  • The Platinum Report provides intensive investigation into areas of concern and includes financial information, payment analyses, and other valuable information about the company.
  • The Gold Report is the most detailed of KreditInform’s telephonically researched reports. It includes a detailed assessment of the company’s potential risk.
  • The Silver Report offers all the standard areas of credit reporting including payment trends that have been monitored over a protracted period.
  • The KreditInformation Sharing System reflects the overdue percentage over a 12-month period and provides a total outstanding and total overdue amount, spread over a number of suppliers. It tracks a debtor’s payment performance and reflects any cyclical trends in payment.
  • An Enquiry Analysis reflects the number and timing of enquiries about the subject, indicating how credit active a company is.
  • KreditInform’s Assessment provides a professional view of a debtor for a particular amount over a specified term.

What information is of most use to prospective investors?

Payment behaviour is the most important aspect. You need to know how the business conducts itself, and how long it takes to make payments

How long does it take to obtain a report?

Online reports are available immediately. Where more thorough research is required, a report takes between 24 hours and five days to generate.


Costs range from R150 for a basic report, depending on volumes purchased, to R7 000 for an in-depth analysis.


+ 27 11 777 2700/2845, [email protected]

Franchise Zone
About the Author
Franchise Zone is published by Entrepreneur Media SA. It offers advice and franchising opportunities in South Africa.

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