The safest way to find out company’s extent of responsibility is to learn the list of its current debts. Debts information lets obtain a comprehensive view of company’s financial standing. It is especially important by closing a big deal. A business partner burdened with numerous defaulted loans, not paying agreed funds to the budget, lets not only itself down. In addition, company’s reputation is exposed to danger by agreement for cooperation with this business partner.
Under company’s debts are all undertaken financial liabilities meant that a company did not manage to fulfil. Also any current existing loans are referred to debts, even if repayment period has not matured yet. By itself it is normal to have such loans: under the current economic conditions many organizations live and operate on credit. But if loans information is accompanied with the list of other debts it makes sense to grow suspicious.
In order to determine partner’s reliability level, you will need all information on debts available:
Debts to own employees (for instance, unpaid wages);
Debts and outstanding liabilities to business partners.
The latest point may catch the interest of prospective business partners particularly. But every kind of debt is important. If a company undergoes financial troubles and is not able to regulate any sphere of commercial interrelationships, chances are high that cooperation with this company will turn out to be unsuccessful.
Why to check debts?
Comprehensive information on company’s debts allows to assess risks when concluding a business partnership. Along with this the point at issue is two types of risk:
In the former case a promising partner applies debts information for preliminary estimation of level for favorable deal. An unreliable partner may cause damage to the company at several levels at once:
Falling level of customers confidence. Success rate of general project depends on both participants. If at least one of them evades obligations, most likely the project ends up with failure. Even if one of them manages to fulfil general obligations alone, consequences are usually extremely adverse. Numerous petty debts and delays can destroy company’s reputation all within a few months, despite its faultless provision of services over the years.
Falling level of other partners confidence. Participation in “dirty” financial history will cast a slur on your reputation, even if you are not guilty of the happened failure in no case. Debts information, true reputation – all this information is easily available nowadays. For this reason inability to gain insight into partner’s potential capacity can be recognized as even greater disorder than conscious repudiation. It is still possible to reach an agreement with a cunning partner. But a short-sighted partner is considered to be twice unreliable, as it demonstrates inability to make effective solutions.
Lost debts. The majority of managing directors of unreliable companies will not wait for court judgement in your favor. They just will declare the company bankrupt, liquidate it, and then disappear to an undisclosed location. In conformity with the law, after all in some cases you may claim for the lost funds recovery. But in reality this process can take so much time and money for single-discipline experts that sometimes it occurs to be more profitable to abandon the most part of claims and rest satisfied with small amends. At this stage many managing directors left without money realize that it would be even more profitable to give up this cooperation at the very beginning.
Information on debts to bailiffs and creditors is a “life-line” for companies ready for intentionally disadvantageous cooperation. It takes on particular importance provided company representatives cover up the debts information.
Nobody wants to spread reports to the disadvantage of his/her company, however data hiding in response to straight question may indicate that in other problematic situations this company will try to deceive you as well. It means that a company has not matured for cooperation yet and will not be able to notify you of hard times in due time, when this occurs.
Also debts information lets secure itself (in the long view) from tax exposure that can settle a heavy load to bear for your company in case of your partner’s disappearance.
Business collaboration with a debtor gains quite opposite perspective, when tax authorities openly declare of their intention to throw you under the bus instead of punishing a disappeared partner company. From the viewpoint of the tax authorities, it is you who will be responsible for your business partner, if it is not able to pay VAT and other taxes on its own.
A solvent firm is considered to be not a conventional victim, but a party in charge, that can pay out fixed means to the budget. It occurs for the same reason why a company tarnished with an unsuccessful partnership loses reputation. As the debts information is available upon request to proper organizations, it is deemed that you have taken a risk consciously by deciding to cooperate with an unreliable legal entity – and now you must pay off for consequences.
Debts information checking is a natural and even obligatory step before making a decision on cooperation with an unknown company. The similar method cannot fully protect you from risks inevitable when making a deal. But if you dispose of complete data on partner’s debts, then in that case you are secured from some unpleasant surprises at least.
Business partner’s debts
Despite the fact that business partner’s debts information is often publicly available, it usually fails to get access to it on a single occasion. The majority of companies being behindhand in clear financial history strive to cover up their traces in case when access to the definite data may bring too much plain truth to light.
The simplest way to see all current debts is to check company’s accounting reports. But the majority of shell short-lived companies have a skilled accountant on staff trained to cover up true balance data skillfully. If necessary it is possible even to fabricate information on profit in such a way that it will be impossible to find out the truth.
You should not rely on business partner’s “word of honor”, that occurs to be the accounting report with a quick-minded employee at hand. It is better to refer to the sources interested in providing you with information on partner’s debts as soon as possible.
Tax liabilities information
Government institutions willingly provide with similar data upon the official request. Debts information can be handed over directly. For this end you need to fill out a special form, afterwards a duty operator will issue a certificate on enterprise’s debts. It is not obligatory to visit government institutions offices in order to obtain all the required information to the full extent. Just having company’s INN (Taxpayer Identification Number) and KPP (Tax Registration Reason Code), you are able to check its debts online. In order to know debt, you will need to visit the official website of the Federal Tax Service. After entering the above stated data into special fields you will be able to obtain a considerable body of publicly available data on a company, including its debts as well. Just check the “Budget settlements” page in order to learn the full list of tax liabilities of the company presenting the point of interest for you.
Information on debts to creditors
Checking of debts to similar business partners as you may linger on. At this moment there is no way to assert univocally if the company has debts, on the basis of data obtained upon one request. In order to get the desired data you will need to perform audit of primary documentation. An expert must evaluate all available documents:
- Bills of lading;
- Intercompany reconciliation reports;
- Available checks;
- Cash orders.
These data units are of little interest in isolation from one another, but collectively they let make up a comprehensive and accurate picture of enterprise’s interrelation with other companies.
Information on operating loan liabilities (as well as a full credit history) is issued upon a standard request. In order to obtain urgent data on enterprise’s financial standing, you should apply to the Credit reporting agency. It does not matter how many banks a company has changed: the Agency will provide with the data on all official credit interactions.
If you need some additional information, you can contact the company’s designated bank. Usually it is the very that bank where the company has an operating account. In most cases bank employees willingly provide with the information on reliability level of their business clients.
Data on debts to employees
If an enterprise does not pay wages for several months, then it cannot be regarded as a reliable partner. But it is a bit more difficult to get information on debts to own employees, than find the data on obligations infringement against other legal entities.
In order to make yourself safe, initiate records thorough check. The bank certificates on wage disbursements are of particular interest: it is impossible to forge them.
By the way, if company’s staff is not big, it is possible to choose easier way. Just take poll among employees: people, waiting for their wages during months, are not inclined to cover irresponsible management team.
Learn debts in Birank system
With a view to economy of time and work resources it is recommended to automate the process of debts check in cases when it is possible. Birank.com service lets obtain the fullest data on a company without resource to different offices and institutions. All urgent information is displayed on one page for your convenience.
With the help of Birank.com service you can shorten your time essentially, that you spend for the business partner checking. The system collects all data on the enterprise in one place, what can be obtained from the Internet. The most urgent information is as follows:
Information on legal entity’s debts to bailiffs;
Report from the Unified State Register of Legal Entities/Individual Entrepreneurs with comprehensive information on debts to the revenue authorities;
Arbitration cases quantity, state and a full history;
Registered short-lived companies.
And this is not the ultimate list of available data. The service provides with an access to all data legally obtainable upon the first request. You will get comprehensive information on the company’s current financial standing and get acquainted with the list of legal entities related to it someway.
This list proves useful by the detailed review of company’s standing. For instance, if the list of partners includes specifically small companies declaring bankrupt quickly, it makes sense to keep your ears open. Another extreme aspect is also suspicious: a great number of legal entities registered to one and the same managing director. Such mass registrations are usually arranged for fraudulent purposes. Manual monitoring of all these data can be a burdensome process, but the Birank.com service simplifies it up to some clicks.
The amount of automatically obtainable data makes a real impression, and can even embarrass. But you will not have to analyze the given data store by yourself, if you do not wish. For the sake of clients convenience the Birank.com service provides with an analytical report on the basis of obtained data. As the service collects the data from hundreds of companies constantly, it is capable to distinguish degrees of legal entity’s reliability and notify clients of it.
Using Birank.com service, you are expediting the process of partner checking essentially, not causing some extra questions. In order to get all available information, it is enough to enter INN or company’s name, or other known data: owner’s full name, company’s address. Directly upon this you will get an access to the fullest data base on the Russian Internet, customized to determine legal entities’ responsibility degree.