How to carry out a company check

How to carry out a company check: a crucial piece of work when doing business with a new company. You want to be sure that the business you are about to work with is financially secure, well-governed and is a 'going concern'. Here's how to conduct a company check in a few easy steps. Before going into business with a new company you need to do your homework. Is the new business financially stable, is it a going concern, does it have a functioning board? The business check process shouldn’t be time-consuming but shouldn’t miss red flags. Fortunately, you can take a simple set of steps to ensure your partnership won’t result in problems. How to carry out a company check Step 1: Look at public information Your first step should always be to ensure the company has the right to operate in the United Kingdom. Fortunately, you can find most of this information online at no cost to your business. Every company in the UK has a company number, which they usually list on their website or terms and conditions. Cross-check this with Companies House, an agency of the UK government. Companies House’s database records every company number alongside mandatory reporting documents, which are free to view. British saw says that the following must be supplied for free by every company: Registered address Date of incorporation A list of officers, both current and resigned Copies of annual financial statements as well as company returns (in most cases, some unlimited liability companies are exempt) Mortgage charge data Previous company names Insolvency information Step 2: Look at the company’s website A website says a lot about a company’s operations. Illegitimate (or, in some cases, poorly run) companies can give themselves away on their website with red flags they never even thought to hide. During this part of the company check, look for the following: Are the spelling and grammar perfect or near perfect? If not, the company may not be based in the UK, raising questions about its right to operate there. Are the business address and phone number present? Have you cross-checked these with Companies House data and Google Maps (use street-view if you need to)? Is there a privacy policy? Is there a mission statement? Does it align with your company’s strategy and core values? Have you checked www.who.is? This is a service showing details of a website’s domain name. If, for example, you see a website that was set up long after the company it represents, ask why. Step 3: Credit check We carry out credit checks to determine whether a company can pay its debts. Debt is a daily occurrence. Many companies are effectively in short-term debt whenever they receive an invoice, which can take a month to process on average. Credit checks can filter out companies that may not pay in these instances. They will give you peace of mind as a result. Important things to remember: When can I do the credit check? It’s up to you. You can check any company at any time. Can my company perform the check? Usually, no - it would be a waste of resources. Specialised agencies exist to perform credit checks. The UK's top agencies are Equifax, Experian, Dun Bradstreet, Credit Passport and Creditsafe. What does a company credit check involve? It depends, as there are so many factors to consider. But, in general: The size of the company The size of its current debt The company’s income Any mortgages or other fixed liabilities Any risk posed to the company’s industry (for example, a local tourism company would face a stricter credit check during the pandemic's peak). You can directly check if a company is insolvent through Companies House. Some publications (like London Gazette) specialise in naming companies that have failed to pay debts in the past. Step 4: Be measured, be sensible Lastly, aside from the housekeeping measures above, one of the key elements of how to carry out a company check is simply to be smart about it. It doesn’t matter what value you think the partnership can bring; if it lands you in trouble, you don’t want to pursue it. So, check up on any red flags that you spot. After due diligence, ask yourself if you feel comfortable with the arrangements. Does everything add up? Are the people in charge trustworthy? Your employees, colleagues and investors will thank you for asking these questions.

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Rapidly acquire the skills and knowledge you need to lead.

Diploma in Corporate Governance

Certified Company Secretary Professional

Certified ESG Professional

Technology & Governance for Boards

Company Secretary

Overview of Corporate Governance

AI Governance

CSRD Reporting

The director's challenge

Attend online and in-person events to get the practical skills and insights you need to make an impact as a leader.

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