Modern business is dangerous. It constantly demands us to trust people we have never met before over services, time, and money. A good handshake just isn’t enough to guarantee legal security. People are not rigorous enough, which is why the need is greater than ever for due diligence.
One tool out there that can help is the website www.duedil.com which allows you to follow suppliers, competitors, and clients. The website provides free company information, including director’s backgrounds and allows you to compare business with their rivals. Currently, users from 75 of the FTSE 100 companies are using this service to conduct due diligence on counterparties, daily.
However, when Duedil can’t help there are other ways to satisfy your risk assessment.
All of the considerations involve an investigation of either a business or person prior to signing a contract. But remember, you have to ask yourself how much of this may be overkill. Everyone’s boundaries will be different.
Working with a Customer
These are steps that can be taken in the name of due diligence when working with a customer.
- Take steps to indentify your customer- checking they are who they say they are, is more than just for banks and solicitors. Make sure your contract is with the correct trading entity.
- Only offer credit to companies 3 years old with a one-year sound payment history.
- Trade referees- get individuals from both sides to vouch for each others reliability and worth.
- Asking for overall sales volume, so that you can see what risk the value of the order represents.
- Check their credit score.
- Use Google to track their story.
This article was taken from a discussion of the Business Exposure Group.
If you are a Director or business owner and would like to attend one of their informative round-table discussions, please contact email@example.com