SMEs are being urged to background check the debt of business partners, as discussed in Business Matters Magazine
A survey of UK SMEs found that over one in three had been unaware of the debt of a business partner. Thirty two percent said they had been lied to about the state of a company’s finances and 22% had entered into a partnership with a financially unsound partner.
Seventy seven percent of the SMEs had not studied a business partner’s company credit report. Company credit reports detail the financial health of a business and expose county court judgements – legal notices that a company failed to pay a debt.
“We advise business to use a company credit report to find out whether a potential business partner can service its debts, pay its suppliers on time, and maintain stability at board level,” said Dominic Blackburn of 192.com.
Asked what would most concern them in a company credit report, 70% of the poll said they would be troubled by outstanding charges against a company. 65% would be concerned by county court judgments, and over half would be put off by a company’s poor working capital. Forty five percent would be troubled by a company changing its name several times.
Twenty five percent of the survey had commissioned a supplier who had let them down. When hiring a supplier, 40% of the survey were interested in their credit worthiness when starting a long-term relationship. A quarter valued credit worthiness when the supplier was a high value contract.
To read a company credit report visit 192.com utilise 700 million public records, including Company Reports, Directors Records, and Edited Electoral Roll listings.
For more great business tips from the UK’s leading business magazine, check out Business Matters.