Business Partners Abroad: Are Financial And Credit Checks Necessary?
For many companies, adding an international component to business is an important part of their growth strategy. However, finding the right partners to make this a reality can be easier said than done. After all, there may be a very different business culture in your target country and factors may exist that you have not yet considered. There are several things to think about before making a commitment to a foreign partner.
For a start, you must carefully identify your potential partner. The starting point for this is to clarify your needs. Are you looking for a joint venture partner, an affiliate, a representative, a distributor or something else entirely? Be clear about what role you want your partner to play. It should complement whatever side of the business you are performing, to enhance and strengthen the operation as a whole.
Once you know what you’re looking for, how do you go about finding that elusive partner? If you have good contacts in your target country, then that should be your first port of call. However, there are other trusted sources too, such as chambers of commerce and trade organisations. Nonetheless, whatever level of initial trust you have in your potential partner, appearances can be deceptive and it is absolutely critical that you carry out due diligence and perform the requisite checks on their business.
An extensive online check is a good initial course of action. Find out all that you can about the company, including any records and links to other companies, individuals or relevant issues. If you find nothing online about them, then that too should raise suspicions. There may well be a government registry which should have a record of the company in question and financial institutions may be at liberty to disclose information too. Importantly, you should also carry out a credit check on your potential partner. This will tell you whether they have outstanding debts and how reliable they are financially. If your business partner is based in the UK, you can obtain their credit score from expert companies online: http://www.creditexpert.co.uk/credit-score.aspx. A credit check is a simple and cost-effective measure to take, but if you are unsure about the details, consult resources such as https://www.youtube.com/experianUK.
All of this should enable you to understand your potential partner’s financial position, which is vital if you are thinking of working alongside them. However, if you are having difficulty in finding out the information you need, then it is also worth considering using a business intelligence organisation which can be invaluable in compiling a background check.
However, beyond the financial implications of a partnership, you should also factor in the compatibility of your potential partner in terms of goals and values. After all, the actions of your partner will inevitably reflect on your brand and so you should look to find a partner which shares your ambitions and principles. This is something that you can only research to a certain point beforehand. However, once you start to engage with your potential partner, it is an issue which should be at the top of your list of tasks. If after this stage it seems like a good match, you should be in a position to start to think about a contract which will be the foundation of your partnership. Just make sure that it is clear, comprehensive and applicable in both countries at all levels.
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