May 25, 2012
SMEs are putting themselves at risk by failing to check out the financial credentials of business partners and suppliers, according to the results of a new survey.
Conducted by the online directory, 192.com, the research shows that more than one in three SMEs have been unaware of the debt of a business partner; 32% of small firms said they had been lied to about the state of a company’s finances and 22% had entered into a partnership with a financially unsound partner. One in five SMEs has been let down by a supplier.
The survey reveals that few SMEs are doing basic checks into potential business partners — 77% of the SMEs polled had not studied a business partner’s company credit report.
“We advise all businesses to use a company credit report to find out whether a potential business partner can service its debts, pay its suppliers on time, and maintain stability at board level,” said Dominic Blackburn of 192.com.
Company credit reports detail the financial health of a business and expose county court judgments — legal notices that a company failed to pay a debt.
The survey asked respondents what would most concern them in a company credit report. These were the findings: