Two fifths of businesses are risking getting into serious debt because they are simply not checking new customers' credit records.
Research from Better Payment Practice Group found that many firms are offering trade credit but not always checking the creditworthiness of the new customers.
Small businesses in particular are risking future problems.
The study found that around 44 per cent of businesses with less than 50 employees automatically extend credit to new customers.
Despite their size, large companies are more restrained with offering credit to new people, feeling its better to do the checks rather than risking the outlay.
Only 31 per cent said they would give credit without doing the appropriate checks first.
As well as presenting the research, the Better Payment Practice Group website also offers free advice on improving credit management and includes a guide on how to pay and get paid on time.
Debt posing problems for businesses
Financial Services
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