As a business, it is essential to ensure that the partners you do business with are trustworthy and legitimate. Building lasting business relationships with other companies requires a thorough investigation into their trustworthiness. In this blog post, we will show you how to assess whether another company is trustworthy before engaging with them and provide tips on how to speed up and make this process easier.
What makes a company reliable?
A reliable company is characterized by integrity, stability and a proven track record. You can find this out by going through the following steps.
Begin your research by gathering as much information about the company as possible. This can include the company name, address, contact information, and website. Also verify that the company is registered with the appropriate authorities in the country in which it operates. During your research, pay attention to the following factors:
Check that the company is a legal entity, registered with the appropriate authorities. This may vary depending on the country in which the company operates. In the Netherlands, for example, it is mandatory to post a KvK number on the company website. So you can ask for an extract based on this number. In Belgium, you can ask for a company's enterprise number in order to obtain an extract from the KBO.
Research the company's history, including its founding date, any name changes, and major milestones in their business journey. Companies with a long history and a proven track record are often more trustworthy.
Find out the ultimate beneficial owner (UBO)
A UBO is the beneficial owner of a company. If you want to partner with a company, it is important to find out this UBO. For example, this person may have been sanctioned, this person may have been involved in a lot of bankruptcies or there may be other signs that this person does not have a clean motive.
Interesting read: 5 tips to find the UBO
A healthy financial profile is a sign of reliability. Check their financial statements, profit and loss statements, and creditworthiness. This is often a tricky part. By no means all companies, even large ones, file June financial statements on time or publish them on their websites. Creditworthiness is also not always easy to find, but more on this later.
Search online for reviews and feedback from other companies that have worked with them before. A positive reputation is an indication of reliability.
Experience & Expertise
Look at the company's experience in the industry. A long-term and successful presence indicates reliability.
A trustworthy company is open and transparent about their business activities, policies and procedures.
Look at the company's website and check that it is professionally designed and well maintained. A well-designed website can indicate a well-organized business. Also check their social media accounts and the level of engagement and interaction with their customers.
Take this point with a grain of salt if you want to go with a small business. Small companies often do not have the staff to properly maintain a website. Pay extra close attention to transparency and any reviews or references here.
Look into possible legal disputes
Check whether the company has been involved in legal disputes, lawsuits or bankruptcies. This can be a sign of unreliability or financial problems.
Tips for verifying a company's reliability
As can be read, researching the reliability of a company is a lot of work. We've listed tips for you that will help make this process a lot faster and easier.
- Company reports retrieval: A business report contains detailed information about a company including its business structure, financial performance, credit rating and more. This helps you gain an in-depth understanding of the company.
- External tools: Are you going for deeper research and need to story this often? Then tools that use external data can spare you (completely) in your research. For example, for credit reports and credit scores there is D&B Credit and for compliance and sanctions indueD. These tools use over 30,000 global sources to give you the most accurate data in a convenient way.
- Monitoring services: Third-party tools also often offer a monitoring service where you are automatically notified when changes occur at a company you work with (or a customer/supplier). Some examples of changes could be that the credit status is improving/worsening or that a company is being acquired. These are changes that can affect your cooperation with this company. So it is important to be aware of these as soon as possible.
Researching another company's reliability before working with them is critical to minimizing risk and building successful business relationships. Verify that the company is legitimate, reputable, financially stable and operates transparently. Speed up the process using outside sources such as Altares Dun & Bradstreet to gain detailed insights and make informed decisions. With careful research, you can lay the foundation for a long-term and successful partnership with other companies.