What Director Searches Can Tell You About Your Customers

When it comes to protecting your company’s cash flow, there are multiple approaches you can take. We’ve talked a lot before about how you can ensure invoices are paid by issuing them in a timely manner, with the right information, and generally having processes in place to deal with late payments quickly. One of the options you have is to implement a company and director search before you start working with new clients. That might seem a little extreme, but when you’re dealing with lines of credit for new customers, it can be a valuable tool to protect yourself from future cash flow issues.

What Is A Director Search?

A director search is essentially a way of looking up the status and history of a company director. This includes their personal details, a reliable history of their time with the company, and any previous companies they have been a part of, including resigned directorships and dissolved companies. All of this information can be found in real-time, and provided to you in a report to give you a full and detailed understanding of the director, their history and their ability to pay for your services.

What Can It Show You?

A director search can provide you with a wide range of information that can be useful for understanding the status of your customers, their directors and their financial position. For example, you can:

• Protect your company from individuals who carry bad debts.
• Determine a director’s general credentials from their business history, including companies they’ve previously had a directorship with.
• Check the solvency information of those past companies so you can understand whether the director was involved in any failed businesses in the past.
• Gain important background knowledge on potential business partners.
• Highlight if a director has a history of phoenixing insolvent companies.

All of this information is freely and publicly available if you know where to look. Many companies, including us, are able to access this information and create reports, allowing you a full overview of company director history.

Why Would You Do A Director Search?

There are a lot of different reasons why you might want real-time, up-to-date director data for companies you’re working with, or planning to work with. A director is a key person within a business, and have a big influence on how they are run and how they perform. Their history can give you valuable insight into the viability, prospects and overall creditworthiness of the business. Specifically, whether or not they will be able to pay any invoices you issue, and how much credit you should issue.

That same history will also give you a good idea of whether they are fit for responsibility. If they have any directorships for dissolved or liquidated businesses, then you can see how the company performed under their directorship. You’ll also get a good indication of their leadership style and management capability, since this is likely to continue into the current business.

Finally you can examine the companies themselves for potential trends. For example, a high turnover of people in the director position could mean an unstable organisation. If you see their credit rating dropping or new CCJs being taken out, this gives an indication of what’s going on inside the business. If these things only started happening once a certain director started, it might suggest the reason behind the issue.

At Debtcol we don’t just collect late payments. We also work with businesses to put adequate credit management processes in place, do due diligence and make sure that they are exposed to as little risk as possible. This includes a comprehensive company and director monitoring service, which keeps you informed of any changes to the director or company status and the impact those changes might have on their ability to pay you. If you’d like to know more about this service, please just get in touch with the team today to book your free consultation.