How to Verify a Business Before Giving Credit or Udhaar

Before giving credit or udhaar to a new business, verify three things: that they are a real registered business (check the GSTIN), that they have a track record of paying (check their payment reputation), and that the people match the paperwork. Doing this five-minute check prevents most bad-debt losses.

The pre-credit checklist

1. GST check — confirm the GSTIN is valid and Active, and the legal name matches. Do it here.
2. Payment reputation — see whether other businesses tag them Good payer, Bad payer, or Avoid on HisaabScore.
3. References — ask for two existing suppliers and call them.
4. Start small — give a modest first credit limit and increase it only after they pay on time.
5. Put terms in writing — invoice terms, due date, and interest on delay.

Red flags to watch

Pressure to give large credit immediately, a GSTIN that won't verify, a name mismatch, or several "Bad payer"/"Avoid" tags from the trade. Any one of these is a reason to slow down.

Related: How to check a company's creditworthiness.