BUSINESS GUIDE NO.1: THE IMPORTANCE OF KNOWING YOUR CUSTOMER
At Green Door Debt Recovery Solicitors, we emphasise to all our clients the importance of them knowing exactly who their customers are.
We regularly come across cases in which our clients have been dealing with the business under a trading name but are totally unaware of the true legal identity of the owner of the business with which they are trading. It could be that the business is run by a sole trader, it could be a partnership, or indeed it could be a limited company. If you do not know at the commencement of a trading relationship who in fact you are dealing with, it will not be possible for you to obtain a full and accurate picture of the financial stability of your customer. Also should the relationship break down and recovery action be required you will not know who to take that action against. If you wish to discuss any particular case please contact either Philip Boulton or Angela Shaw at Green Door Solicitors on 0161 836 9970.
Before you commence trading with any business, we suggest you use the following checklist;
- Do you know the exact name and the trading style of the business with whom you are going to do business? Types of business include amongst others limited companies, partnerships and sole proprietors.
- If your potential customer is not a limited company, do you know the names and personal addresses of the proprietors or partners? If not, then we suggest you ask a direct question to your potential customer and obtain this information in writing.
- Have you seen any headed paper or other documentation that verifies the information regarding ownership of and legal status of your potential customer?
- Use credit references to check potential customers’ details and credit status.
- Consider talking to other suppliers of the business to obtain references.
- Obtain written orders for all goods supplied and ensure that the details on those orders match those you were given earlier regarding business name and trading style.
- Ensure you know the exact name and legal status of the business you are supplying. If the business is a sole trader or partnership, ensure that you have full personal details including private addresses of the owners of the business. Do not forget that proprietors or partners of businesses are personally liable for the debts of that business.
- If you are extending a significant amount of credit to a limited company then seriously consider obtaining personal guarantees from directors or senior members of staff. This is particularly important when dealing with limited companies. Green Door Solicitors can assist in this process. Please do not hesitate to contact us to discuss this option.
- Do not be afraid to push for all the information you need. If your potential customer is reluctant to supply the information then you should consider the reasons for such reluctance.