Should your business investigate clients before working with them? This may sound like overkill to some business owners, but your company takes on a level of risk anytime it does business with others. What types of risk might an investigation help reduce? And what should you know about investigating clients? Here are a few answers to your questions.
The biggest reason to do any kind of background check on a customer is financial. For instance, most large-scale client–business relationships involve some extension of credit. You may start large projects based on down payments and contractual assurances. Or you might extend formal credit with a credit line at your company. Any time you extend credit, you should check to confirm that the client is creditworthy.
The second reason to check out clients is reputational. When you get into business with another organization or individual, your name and brand can be linked with theirs. If their actions or history could put a black mark on your company, do you really want to be connected to them? Could the danger of bad press be more compelling than the lost income? Each business must answer this question for themselves.
Because you must take on some risk doing business, how can an investigation help? Business credit background checks, just like individual credit checks, look for indicators that someone might not pay their bills. It might include checking for a history of bankruptcy, unpaid taxes, foreclosures, or lawsuits against them. You can also ask for a credit report from the major bureaus.
Your business can look beyond these financial issues as well. Court records showing the company initiating lawsuits might show you they are overly litigious against other business partners or if they break contracts. Their social media accounts may also help you see if they present an image that fits with the image your company wants to project. And reviews can help you see how they do business.
Depending on how much money is involved or how closely you will work together, a business owner may want to further investigate particular projects in the client’s history, individuals who run the client company, or even how satisfied their employees are with the company’s ethics.
Just as with any background investigation, you must be careful not to do anything that could put you in legal jeopardy. Nearly all background checks require the written consent of the person or business being investigated. And you would never want to resort to questionable tactics, such as taking photos in private settings or hacking into someone’s protected social media accounts.
Of course, your company may want to pursue a business relationship with the client in question, so you don’t want to put them off with your background checks. Be upfront about why the check is necessary and what (in general) it may entail. Explain how it will make your working relationship stronger. And if the client has concerns about privacy, consider using a third-party service rather than investigating things yourself.
While a good investigation can save your company from financial losses and protect its brand, it can also be a legal danger. The best way to approach this process is to work with a professional investigative service. They know how to investigate in any situation without running afoul of either legal entanglements or potential obstacles.
J.P. Investigative Group, Inc., can help. We offer services to fit any company budget and will design an investigation that is most appropriate for the size and scale of each client relationship. Call today to make an appointment.
9716 Rea Rd. #211
Charlotte, NC 28277
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