Most bad debt is avoidable, and the point at which to avoid it is before the work starts. Ten minutes of checking is cheaper than three months of chasing.
None of what follows is intrusive or unusual. It is what any credit department does as a matter of routine, and small businesses skip it almost entirely.
Confirm the company exists and is in good standing
A registration number is not proof of anything by itself. Check that the company is active rather than in deregistration, and that its annual returns are filed.
A business that has not filed its returns for three years is telling you something about how it is administered, and administration is what pays invoices. This is the single highest-value check available and it is free.
Confirm you are dealing with the right entity
Trading names and registered names differ constantly. Invoice the entity that is contracting, with its registration number on the document, and make sure the person signing has authority to commit it.
An invoice addressed to a trading name that does not correspond to any registered entity is difficult to enforce, and that difficulty only shows up when you need to.
Ask for trade references
Two other suppliers, and actually call them. The question that produces a useful answer is not "do they pay?" but "how long do they take, and have you had to chase?"
Suppliers are candid with each other about this in a way they are not in writing, and a five-minute call frequently produces the whole picture.
Look at the size of the exposure
The check should be proportionate. A first job worth a small amount is a cheap way to find out how somebody pays. A first job that represents a substantial share of a month's revenue deserves more care.
A useful discipline is a limit: how much you are prepared to be owed by one customer at one time, set before the enthusiasm of a big order. When that limit is reached, work pauses until it clears.
Start small with anyone new
Where you can, structure the first engagement so the exposure is limited — a smaller piece of work, a larger deposit, or shorter terms until a payment history exists.
Then extend terms as they earn them. That sequencing is the whole of credit control for a small business, and it is far more effective than any amount of chasing later.
Notice when behaviour changes
A customer who paid on time for two years and is suddenly at sixty days is not being difficult. Something has changed, and you are unlikely to be the only supplier affected.
That is the moment to reduce exposure and ask, not the moment to extend more credit because they have always been good for it.
General guidance on commercial practice, not legal or credit advice.