Should I Extend Credit to a New UK Limited Company? A Practical Checklist for 2026

A new supplier has asked for open-account credit terms. They were incorporated eighteen months ago. Their website looks professional. The director was polite on the phone. The first order is for £8,000.

The question that lands on every UK finance team's desk at some point is: how much of the counterparty's history can you learn in twenty minutes, and what should change your answer from yes to no?

This guide is the checklist. Ten concrete things to check on free public sources, what each signal actually tells you, three worked examples of green, amber, and red decisions, and how to structure the deal if you decide to proceed despite uncertainty.

Quick summary. For a UK limited company under three years old, the default position should be cautious. Run the ten-point check below. Two or more red signals usually means either declining the terms or moving to a risk-mitigated structure (payment in advance, personal guarantee, lower limit, insurance). Companies House, the Insolvency Service disqualification register, and the London Gazette together cover the public signals you need. The whole check takes twenty to thirty minutes per company, done properly, and all of it is free.

Why company age matters

The Office for National Statistics business demography data tracks survival rates for UK businesses by age cohort. Across the last decade, roughly 40% of UK business births survive to five years. The sharpest drop is in years one and two.

A company at eighteen months old is in the highest-failure zone of its life, statistically. That doesn't mean you don't trade with young companies. It means you price the risk honestly and structure the terms accordingly.

The ten-point checklist

Work through these in order. The whole process takes twenty to thirty minutes for a typical company.

1. Company status

Open the company on find-and-update.company-information.service.gov.uk. Confirm status is "Active." Any other status, including "Active — Proposal to Strike off," is a hard stop.

If the status shows a Gazette notice has been published, the company is in the two-month window before being struck off. Trading with a company in that state means pursuing a debt against an entity that may not exist in eight weeks. Decline or require payment in advance.

2. Incorporation date

Note the incorporation date. Companies under twelve months old carry the highest risk. Twelve to thirty-six months is elevated risk. Thirty-six months or more is when the failure curve flattens.

A company that looks professional and has an eighteen-month incorporation date is normal. A company that looks professional and was incorporated six weeks ago is worth a harder look. Branding and a working website can be stood up in a weekend. The Companies House incorporation date cannot be back-dated.

3. Registered address

Check the registered office address. Three patterns to flag.

Pattern A: A formation agent or virtual office address (a London address that resolves to a serviced office or a named agent's HQ). Not a red flag on its own. Most legitimate new companies use them at incorporation. Becomes a flag if combined with a very high count of other companies at the same address.

Pattern B: A residential address. Normal for a one-person consultancy. Unusual for a company claiming to have multi-site operations.

Pattern C: A mismatch between the registered address and the trading address on the company's website or invoices. Worth a phone call to confirm both are current.

4. Accounts filing history

Click "Filing history." Look for the most recent annual accounts.

A company over 21 months old should have filed at least one set of accounts. A company over 33 months old should have filed two sets. Penalties for late filing escalate with time. A newly incorporated company that has not yet reached its first accounts deadline is fine. A company with a deadline in the past and no accounts filed is either late or inactive, both of which change the decision.

If accounts are filed, note whether they are dormant accounts (meaning no transactions in the period) or active accounts. A company asking for credit while filing dormant accounts is either restarting or misrepresenting.

5. Confirmation statement filing history

The confirmation statement confirms the registered particulars each year. Unlike accounts, it is required in the company's first year. A company over fifteen months old with no confirmation statement filed is materially non-compliant.

Late confirmation statements alone don't break a deal. Persistent lateness across accounts and confirmation statements together is a reasonable proxy for "this company is badly run" and badly run companies default more often than well-run ones of the same size.

6. Charges register

Click "Charges." A charge is a legal right a lender has over the company's assets. Charges are not inherently bad. A new company that has taken a loan secured against stock or equipment is using normal commercial finance.

What to look at:

• Number of charges in the last twelve months. Multiple new charges in a short window suggests the company is raising secured debt repeatedly.
• Satisfaction status. A satisfied charge is paid off. An outstanding charge is live.
• Type of asset. A fixed charge over specific equipment is different to a floating charge over all present and future assets. The latter, if held by a lender, means the company has very little asset headroom left to offer other creditors.

A young company with three outstanding floating charges is not a good candidate for unsecured trade credit. You would be behind three secured lenders if things go wrong.

7. Directors and their history

Click "People." For each current director, click through to their officer profile and check their appointment history.

The signals to look for are the same red-flag patterns covered in the companion post on what Companies House doesn't tell you about a supplier's director. The short version:

• Three or more dissolved companies in the last five years is worth a pause.
• A dissolution followed by a new incorporation within 180 days is the phoenix pattern.
• Very high concurrent appointment counts (50+) suggest a nominee arrangement.
• An active disqualification is an immediate stop.

For a new company, the director history is often all the track record you have to go on. The company itself hasn't had time to build a record. The people running it have.

8. PSC register

The Persons with Significant Control register shows who ultimately owns or controls the company. Click "People" and scroll to the PSC section.

Two things to note.

A: Is a PSC declared at all? Every UK company must declare either a PSC or a reason none exists. A company with "no PSC for this company" and no stated reason is non-compliant.

B: Is the PSC a person or another company? A PSC that is another UK company is fine if that company itself has reasonable disclosure. A PSC that is an offshore company or a trust is not disqualifying but reduces the clarity of who you are actually dealing with.

9. Gazette notices

Search the company name at thegazette.co.uk. Any active notice against the company is material. Insolvency notices, winding-up petitions, administration appointments, and First Gazette Notices all appear here.

Most new companies will have no Gazette presence. Those that do are at a materially different risk level.

10. Disqualification register

Search each current director's name at find-and-update.company-information.service.gov.uk/register-of-disqualifications. Confirm date of birth month matches before treating a hit as material.

An active disqualification order against a current director is a hard stop. Either the director is breaching the order, or the register entry is mismatched. Both are reasons to decline until clarified.

Interpreting the results

Most young companies produce a mixed picture. That is normal. The question isn't whether everything is clean, it is whether the combination of signals justifies the credit you are being asked for.

A practical rule for the first three years of a company's life:

• Zero red signals: proceed with standard terms for the size of the relationship.
• One yellow signal (late filing, one recent charge, director with one past dissolution): proceed with lower initial limit and shorter terms, review at three months.
• Two or more yellow signals, or any red signal (phoenix pattern, active Gazette notice, disqualification, multiple floating charges): decline open-account terms. Offer payment in advance, personal guarantee, or insurance-backed structure.
• Hard stops (striking-off in progress, active disqualification of sole director, winding-up petition published): decline regardless of structure.

Three worked examples

Example 1: Green

A software consultancy. Incorporated 22 months ago. Sole director has three other active appointments, all in similar services businesses, all active and filing on time. First accounts filed on time, showing modest turnover. No charges. Registered office is the director's home, which matches the trading address on the website. PSC is the director as a person. No Gazette notices.

Decision: standard open-account terms, £5k limit, 30 days. Review at six months.

Example 2: Amber

An e-commerce business. Incorporated 14 months ago. Two directors. Director A has a clean record, two active appointments. Director B has five past appointments, two of which were dissolved in the last three years, one of those after a creditor objection. First accounts due in three months, not yet filed. One outstanding floating charge registered six weeks ago to a fintech lender.

Decision: not standard terms. The past dissolutions in Director B's record plus the recent floating charge mean other lenders are senior to you in distress. Offer a £2k limit for the first three orders, shorten to 14-day terms, require payment before the fourth order until twelve months of clean payment history is on record. Alternative: take a personal guarantee from both directors.

Example 3: Red

A construction subcontractor. Incorporated four months ago. Sole director has twelve past appointments, four of which dissolved in the last seven years, two in liquidation with creditor objections filed. The dissolved company most recently liquidated was in the same sector with a very similar trading name. Registered at a formation agent address shared with 80+ other companies. No accounts yet due. PSC declared as another UK company, which is itself registered at the same formation agent address.

Decision: decline open-account credit. The director history fits the phoenix pattern and the corporate structure obscures beneficial ownership. Offer payment in advance only. If the relationship is strategically important, require a director personal guarantee plus a parent company guarantee from the PSC entity.

If you decide to proceed: risk-mitigation structures

The checklist above is not only a pass/fail tool. The more useful output is a structured counter-offer when the full terms the customer requested don't fit the risk.

Payment in advance. The simplest and strongest protection. Works for low-trust relationships where the customer still wants the product. Offer a discount for the first three orders to soften the ask.

Lower credit limit, shorter terms. Instead of 30-day terms at £10k, offer 14-day terms at £3k. Review monthly. Limits and terms can expand as payment history builds.

Personal guarantee. A personal guarantee makes the director personally liable for the debt if the company defaults. For a young company where the director is the real counterparty in effect, a personal guarantee aligns incentives. Get it in writing, signed, and take legal advice if the value is material.

Trade credit insurance. Atradius, Allianz Trade, and Coface underwrite trade credit. Premiums typically run 0.1–0.5% of insured turnover. For high-volume customers, insurance can move a borderline decision into "yes."

Retention of title. For physical goods, a retention of title clause in your terms of business means the goods remain your property until paid for. In insolvency, this significantly improves recovery.

Parent company guarantee. If the counterparty is a subsidiary of a larger group, a guarantee from the parent changes the credit analysis. The parent has to be financially better than the subsidiary for the guarantee to matter.

Where monitoring tools fit

The checklist above is a one-off check. It tells you what a company looks like today. It does not tell you what happens next month.

For a small number of customers, re-running the manual check quarterly is workable. For anything larger than about twenty active customers, you need continuous monitoring. A company that passes the checklist today may look different six months from now: late accounts, new charges, key directors resigning, Gazette notices.

This is where Vigil fits. You run the checklist once when onboarding a customer. You add them to your watchlist. From that point, Vigil monitors Companies House and the London Gazette for any change on that company or its directors, and sends a plain English alert the day a change occurs. You don't have to remember to re-check. The alert arrives when something material happens.

Pricing starts at £27 per month, monthly, no contract. Join the waitlist for early access.

What to take away

1. For UK limited companies under three years old, default to caution. Use the ten-point checklist before extending open-account credit.

2. The company record tells you some things. The director record tells you the rest. Always check the officer profile, not just the company page.

3. Two yellow signals or one red signal should change the structure of the deal, not only the answer. Payment in advance, lower limits, personal guarantees, and trade credit insurance are the practical levers.

4. A clean check today is not a clean check next year. Either re-check quarterly or monitor continuously.

5. The hardest cases are the ones where a polite, credible director runs a company whose public record has a pattern the director isn't volunteering. The checklist catches the pattern when the phone call won't.

Further reading

• Companies House filing deadlines and penalties — official guidance on accounts and confirmation statement filings.
• ONS business demography — UK business survival rates.
• Register of Disqualified Directors — free search for active disqualifications.
• What Companies House doesn't tell you about a supplier's director — detail on the director checks.
• How to get dissolution alerts from Companies House — what to do when an active customer starts dissolving.
• How to spot supplier financial distress before it hits you — earlier warning signals beyond the initial check.

Frequently asked questions

At what age does a UK limited company become lower-risk for credit? There is no single threshold, but three years is a reasonable heuristic. ONS business demography data shows the highest failure rates in years one and two, with the failure curve flattening after year three. A company trading for five or more years with on-time filings and no distress signals is materially lower risk than one of the same size in its first eighteen months.

What Companies House signals should I check before extending credit to any limited company? Status, incorporation date, accounts filing history, confirmation statement filing history, outstanding charges, directors and their appointment history, PSC disclosures, and any Gazette notices. Each of these is free to check. The combination, not any single signal, is what matters.

Is it legal to refuse credit based on a director's past dissolved companies? Yes, for B2B commercial decisions. Companies House data is public under the Open Government Licence and may be used to inform credit, contract, and procurement decisions. For consumer-facing credit, UK GDPR and the Equality Act impose constraints. For B2B trade credit between limited companies, a refusal based on director history is legally unproblematic.

What's the fastest way to reduce credit risk if I do want to trade with a young company? Four options in rough order of effectiveness: require payment in advance for the first three to six orders; take a personal guarantee from the director; use trade credit insurance; or structure the trade with a lower credit limit and shorter terms, and review monthly. Retention of title clauses in your terms of business also help for physical goods.

How often should I re-check an existing customer after approving credit? At minimum, annually at account renewal. Realistically, this is where monitoring tools pay for themselves, because material changes often occur between reviews. A company that was healthy when you approved credit twelve months ago may have filed late accounts, registered new charges, or had key directors resign since. Continuous monitoring catches these changes the day they happen, not at the next annual review.

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Vigil is a UK company monitoring tool that re-runs this checklist for you automatically on every company in your watchlist. If you'd like the day something changes, not the month, join the waitlist or get in touch.