How to credit check an NZ company

Most credit checks in New Zealand stop at the first step: confirm the company exists, glance at whether anything alarming is on file, and approve the account. That is enough to catch a company that has already failed. It is not enough to catch the far more common case — a solvent business that simply pays everyone late.

Here is a sequence that covers both, ordered so the free checks come first and you only spend money once a customer is worth the spend.

1. Confirm you have the right legal entity

Trading names are not legal entities. “Harbour City Joinery” might be a division of a holding company, a separate operating company, or a name with no company behind it at all. Before anything else, get the NZBN and the exact registered legal name, and make sure your credit application, your invoices, and any personal guarantee all name the same entity.

This is the single most common failure in supplier credit. A default registered against the wrong entity is unenforceable, and a guarantee signed by a director of a different company in the group is worth nothing.

2. Check status, age, and the company’s history

Once you have the right entity, look at:

• Company status — registered, in liquidation, in receivership, or removed
• Incorporation date — a company incorporated six weeks ago has no trading history to assess, whatever its directors say
• Name changes — frequent changes are not proof of anything, but they make a company harder to search and are worth a question
• Registered office and address for service — you need a valid address to serve notice later

All of this is public on the New Zealand Companies Register, and free on PaidWell.

3. Look at the directors, not just the company

Directors carry their track record between companies. A director who has been involved in several companies that were removed or liquidated is a pattern worth understanding — not automatically disqualifying, since business failure is common and often blameless, but worth a conversation before you extend terms.

4. Check how they actually pay

This is the step most checks skip, because until recently the data did not exist outside each supplier’s own ledger. The question is not “has this company defaulted?” but “when this company receives an invoice on 20th-of-the-month terms, when does the money actually arrive?”

The useful form of this is a distribution, not a single number. A company that averages 12 days late because it pays most invoices on time and a few at 90 days is a very different risk from one that pays everything at a consistent 12 days late. Look for the median, the spread, and — most importantly — the direction of travel over the last few quarters.

PaidWell computes this from the ledgers of suppliers who already invoice that company, aggregated so no individual supplier is identifiable. See what a credit check actually shows for what is and is not visible.

5. Take trade references — and read them properly

Trade references are still worth collecting, with one caveat: the customer chooses which referees you talk to, so you are seeing their best three relationships. Ask referees for specifics rather than impressions — how long they have supplied them, their typical terms, their largest outstanding balance, and whether they have ever had to chase. Vague warmth is not a reference.

6. Set a limit, write it down, and review it

A credit check that does not end in a documented limit has not finished. Record the limit, the terms, the date, and what the decision was based on. Then diarise a review — the check you ran today describes a company as it was today, and the whole point of payment behaviour is that it moves.

The practical checklist for this step is in checks to run before extending payment terms.

A note on what this is not

PaidWell is an information service, not a credit bureau, and nothing here is credit advice. It is one input into a commercial decision that remains yours. For larger exposures, take professional advice.