| You have been approached by a potential client, but they’ve asked for credit terms with you or it is a big contract for you and something isn’t ringing right. You do not want to do a load of work for someone and then find that they are not going to pay you. What checks can you do for a quick cheap stalk before agreeing to work with them? You can start on companies house, simply search their company name and you can see all sorts of company information and filed accounts. First thing to check is, are they up to date on their submissions, anything overdue will be in red on the front page. Good admin is important, so this is a good indicator of if you want to work with a company. Next look at the people tab, are the people listed as directors and shareholders that you’d expect. Any surprises or people that have never been mentioned? Don’t be afraid to ask for clarification. Then let’s go to the filing history tab, here you’ll be able to see everything they’ve ever sent to companies house. The accounts will likely show as micro company accounts. you can view these simply by clicking view pdf. For small companies they don’t have to file much information at all, usually you will just see a balance sheet. This is due to change at some point with all companies having to publish profit and loss reports, but the final date for this hasn’t been decided yet. There are some red flags to look out for however.On the statement of financial position, look at the capital and reserves number, you want this to be positive. This means they have more assets (cash, equipment, debts owed to them) than amounts that the company owes to other people. If it’s a big minus this can show they owe a lot of people money. Again you can ask them why, is it company loans to by equipment that are being paid back and helping the business grow? Or do they just owe a lot of people a lot of money? I always have a nosey at the notes, how many employees are listed, is there anything else of interest? |
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| Some charges against the company will also show on companies house so you can get a feel for if they have a history of financial trouble. Another search you can do is for people, this will list all the records of a person on companies house. Do the directors of your potential client have a history of opening and closing businesses? Are they the director of many different companies? Companies house can be found here:Find and update company information – GOV.UK (company-information.service.gov.uk)You can also carry out credit checks on companies, these tend to cost £30 but it is well worth the expense if a customer is asking for credit. If they have a track record of being a poor payer this will flag it for you and then you can choose if you want to proceed. It’s better to lose the client than do the work and never get paid. we don’t work for free! Finally remember to do a good stalk online, check for reviews and have a look at their Linkedin. You can usually tell a lot from a good online stalk! Being familiar with companies house for your own limited company is also important. It is your legal responsibility as a director to keep all the information held on companies house up to date and accurate. Have a look through and check the address, listed directors and shareholders, are all your filings up to date. Anything that doesn’t look right to you will need updating. |
