If you own a construction company, you only want to work with clients who are financially stable and capable of paying for your services. Due to the complexity, costs, and time needed to complete a construction project, you can ill-afford to take on a client who will be unable to come up with the cash necessary to complete a project.

But how can you find out if a potential client is a safe bet to work with? Well, one easy and effective way you can research a company is by examining its credit report. The following are some things to look for when going over a commercial credit report:

  • Positive or negative trends in regard to paying debts.
  • Negative filings, such as tax liens.
  • The timeliness in which the company pays its debts. In other words, is the company habitually late paying its bills?
  • The size of the client’s vendor credit lines.

Essentially, a commercial credit report can provide information to help you do a financial risk assessment of your potential client. For example, it is no great concern if a client occasionally makes a payment a few days late. However, constantly making payments 30 or more days past the established terms should serve as warning that the client is risky.

Before you agree to do a construction project, you should know as much as you can about your client. And you should also get your service agreement in the form of a well-written contract. As such, before signing on the dotted line, you may want to have a business litigation attorney help you craft a contract that clearly delineates all rights and responsibilities held by both you and the client. Additionally, if you ever have trouble with a client breaching a contract, an attorney can help you take measures to bring the dispute to a satisfactory conclusion.