Article
Written by Marc Bishop
Posted on 20/01/2018

The benefits of looking a little deeper

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In many cases, when taking on a new client, increasing the existing credit limit of an existing client, or understanding the sector that your prospect works in, is one thing. But to really know your client is another thing entirely. How can you be completely sure who you’re dealing with?

Do you check key information during your onboarding process?

What if there’s something that doesn’t stack up quite right about a new application for credit? Maybe the address seems to be at odds with the type of business, for example an exporting business based in the middle of a new housing estate? Or the director never seems very forthcoming with their previous history…

Did you know?

At Graydon, our reports can be tailored, depending on the depth of information our customers require. A ‘Database Report’ provides a good overview and profile of a business and the industry sector that it operates in. 

However…

It’s unlikely that you or anyone in your organisation has the time to fully investigate a prospective client, such as visiting multiple premises, or conducting a background check on a director or owner. You may even have an impatient salesperson asking why the onboarding process is taking so long. Graydon can take the burden of investigation off of you, whether the organisation you’re signing up is a sole trader, partnership or limited company.

One thing we pride ourselves on is the additional level of investigation, provided by the “Fresh Investigation” - unique to Graydon - and provides an additional layer of security for our customers.
Conducting this additional diligence isn’t always negative, after further exploration of a company’s parent, who may be overseas, this could be used to increase the credit limit offered, if they are particularly financially strong. 

What should you be looking at? An example:

Typically, the investigation will involve our analysts establishing a number of elements including whether the board/management are connected to any previous failed businesses, whether the business was acquired, verification of the business premises, and, based on filed accounts, an in-depth analysis of financial position of the business.

Step 1: Perform an in-depth analysis of the latest filed accounts
Does a profit in the accounts hide an underlying weakness?

Step 2: Check whether the company is connected or associated with any failed companies (including overseas businesses)
You should check both parent and sister companies. How strong is the group?

Step 3: Use expert advice to establish the credit limit. Could it be increased?
Experienced analysts can advise higher, or even bespoke limits for clients

Step 4: Establish the location of the business
Is the company based in a virtual office, or a ‘real’ office?

Step 5: Review the wider circumstances: management, press, industry sector and the economy
What has happened to the company since the last filed accounts? Has the management changed? How is the industry sector the business is in, performing?

A closer look at the tenure of the property held by the organisation is also important, you should investigate and verify not only that the business operates from the address, owns it or rents it, but the wider circumstances also. Has the property recently been up for sale? Or is it being advertised or listed for sale now?

If you would like more information how we can help you investigate a potential client, to ensure an appropriate credit limit, and protect your business at the same time, click here to find out more.