Status enquiry is necessary when

Status enquiry is necessary when granting credit to a new customer. This is because it helps the business to gather information about the customer's creditworthiness, financial stability, and ability to pay debts. The information gathered through status enquiry helps the business to determine the risk involved in granting credit to the customer and to set appropriate credit terms and conditions. It involves contacting the customer's bank, trade references, or credit bureaus to verify their credit history and reputation. This helps the business to make informed decisions and minimize the risk of bad debts.