Business

What is the importance of Business Verification?

Protecting the company against late payments and/or possible bad debts implies the systematic checking of the risk limits of each active business. It is essential to do a rigorous control of the credit and to have updated the references of information about the business.

Many companies are very careful in carrying out credit risk checks on new customers. But it is just as important to check that this information is up to date.

Since the solvency situation of our clients can change rapidly, it has never been more important than now to continuously validate all the data about our active clients. In case a customer is in trouble, we should not be the last to know.

So, it is very important to conduct business verification before any further dealings with the company or client. It is essential that the credit limit granted to each client meets a series of requirements:

  1. That what you see abroad is what you want you to see:

Recent financial disasters have shown that they are sometimes the biggest and most attractive companies that end up collapsing and taking everyone down with them. No matter how good you think your relationship with a potential business partner is, you should always keep in mind that what you see abroad is what you want you to see.

  1. That it estimates by an objective, contrasted, and dynamic method, establishing periodic reviews:

The commercial and financial information of a company is on the Internet at a click and at a low cost: there is no excuse for not checking it. The database or legal incidents must also consult.

Unlike the annual accounts deposits, this information is constantly updated. Gathering all this information is a laborious task. That is why many companies rely on a third party to use an objective and proven method.

  1. That it be established by another department other than the commercial one:

This verification of clients usually falls to the financial department of a company, since it is the one that has all the information about the client: billing, payment method, collection period and default, if any.

  1. Verify publicly available information:

The company’s social media, press release section on its website, and information available through a simple search engine can help you determine if the company is having issues that may affect your ability to pay. Listed companies must also regularly file factual reports on the state of the business. These are generally available on the company’s website or through state regulations.

  1. Lastly, it must be consistent with the sales volume:

This means that the risk with each client must be proportional to the volume of sales. The risk with a client who has annual sales of 100,000 dollars is not the same as with a client whose annual sales are 1,000,000 dollars.

Therefore, we conclude that carrying out business verification and risk controls on our clients are essential to maintain the financial solvency of our own company.

Before you begin your deal with any company, if you want to verify the business of the other company you’re going to do business with, and get a business credit summary, you can do it with a KRT Inspect company. They also offer access to credit reports, scores, monitoring, and fraud protection.

Teresa G. Diggs Administrator
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