Why Would You Want To Do A Company And Director Search?

When it comes to protecting your company cash flow, there is more than one way to skin a cat. The best approach is to cover multiple angles, ensuring you have policies in place to not only deal with late payments should they arise, but also to stop them happening in the first place. There are a lot of different ways you can do this, and one of them is by performing a company and director search before you start working with a new business. That might seem a little out of place on the face of things, but when you’re dealing with lines of credit for new customers, it can be a valuable tool in protecting yourself. If you’re not sure why you would want or need to do these searches, we have a few reasons for you.

Company History Matters

Company searches are usually the most popular option, because it’s easy to see the value in them. As a company, you will have a financial history, that is usually visible through things like your accounts filed with HMRC, and other documents. These documents can show what the real state of your business is, whether you’ve had any ups and downs in the past and whether you are financially stable. It will also show if you’ve got any debts to pay, or if you’re being pursued for money by other entities. Having all of this information on your customers means you have the chance to make an informed decision as to whether you want to work with them or not, and what risk that carries.

Directors are Pivotal People

When we get into director searches, it can get a little more confusing. But for limited companies, directors are the most important people in the business. SME’s will tend to have 1-3 directors, while larger companies may have a board of directors who run the operations of the company and make all the important decisions. Directors can have a massive influence on the performance of the company, since they will be heavily involved in the strategic planning and execution of the business plan. But directors can also be telling of issues within a business. Just by looking at how long the directors have been at the company and what the turnover is like, you can see if there are deeper issues in the business that could create issues for you in the future. So, if there is a high turnover of directors, it might be worth diving deeper into the details of the business. Are there potential relational conflicts within the company? Does the business plan keep changing? Is there something wrong in the business that means it’s affecting the generation of new business? Look for trends of when there was a change in directors and do a search on the internet to see if this corresponds to any news or events. Check the company’s credit rating at the time the director joined or left, did this have a negative or positive effect? If the company has any bad debts, check when they were and who was directing at the time. Or if you don’t want to do all of this yourself – hire someone like us to do it instead.

Don’t Jump to Conclusions

Of course, as with every kind of investigation or check you might want to run on a prospective customer, you do need to be careful. The more detail you get about the company, the directors and their past, the easier it is to jump to conclusions. After all, just because a director has had a failed business in the past, doesn’t necessarily mean they’re incompetent or untrustworthy. It could just be down to external factors – like the financial crisis of 2008, or COVID now. Don’t make snap judgements based on this information – instead use it to make informed decisions.

The idea behind doing these checks is not to use them to decide whether or not to trade with them. Instead, it should be about understanding the risk factor for that customer, and whether you want to put some extra protections in place before you do business with them. If you need help understanding the information you’ve found during a company or director search, or you would like us to run some searches on your behalf, just get in touch with us today for your free consultation.