Tips and tricks for checking the reliability of a company

How do I know that a company is reliable?

3 Mins

Do you have doubts about the reliability and authenticity of a company? After all, you want to be able to make the right business decisions.

Before you deal with a company, it is recommended to check if the company is legitimate and authentic. You also need to know whether the directors of the company have sincere intentions, just like you.

This article will give you a better understanding on how to trust your business partner and when to avoid them in case of suspicious circumstances.

Before you deal with a company, it is recommended to check if the company is legitimate and authentic. You also need to know whether the directors of the company have sincere intentions, just like you.
Chapter 1

Check whether the company actually exists according to the official institutions

Check whether the company you are dealing with is listed in the publications of the official sources such as the Belgian Official Gazette, the Crossroads Bank for Enterprises or even via the Creditsafe platform. 

Crossroads Bank of Enterprises
In Belgium, all forms of companies are required to register with the Crossroads Bank for Enterprises (or CBE) before launching their activity.

They must also have their articles of association published in the Belgian Official Gazette with the help of an approved notary. When they are published, they are obliged to provide a number of necessary details, including the identity of the directors.

Finally, as from a certain turnover and number of employees, companies are obliged to file their annual accounts at the National Bank of Belgium.

Finding the company via Creditsafe
Do you have doubts about the credibility of your new business partner? What do you actually know about the reputation of this business partner on the market? Maybe you wonder if your customers and suppliers have sufficient cash to fulfil their payment agreements?

Therefore it is always advisable to perform a full risk assessment and check the credit rating and reliability.

Creditsafe offers you the possibility to check your business relations on their reliability and solvency, so that your (large) contracts do not pose a potential risk to your organization.

You can also find the profiles of the different business managers with their current and previous mandates.

FSMA: the Financial Services and Markets Authority
If the company you are auditing is active on the financial market or processes large money transactions, you may find it on the website of the FSMA.

For such activities, the company needs a license (or sometimes an entry in the register) from the Financial Services and Markets Authority. This organisation is responsible for supervising the Belgian financial sector, together with the National Bank of Belgium.

If you cannot find the company in question, it may be that this organisation is not subject to or does not comply with the rules of the FSMA.

No reason for immediate panic yet, but caution is advised.

Chapter 1

Visit the company website

Search and visit the company's website. Look for specific elements that may indicate that the company is authentic and not a scam.

Check the spelling and grammar
If you notice that the language on the website is (generally) not strong enough, this may point to a foreign company. Especially if it is claimed that it is a national entity. Of course, take this remark with a grain of salt, given the linguistic duality in our country.

Consult the privacy policy
Is the privacy policy included on the website and does it contain the elements that should be mentioned? Is there an online history of the company? Usually, a confidentiality policy contains the name and official contact details of the company.

Simplify your research by checking the credit rating and contact details of this new business partner through a recognised provider of business information, such as Creditsafe.

Chapter 1

Verify the directors

The owner and/or the director identity can say a lot about a company's perspectives.

Company directors have an important power in making strategic decisions. They define the direction they want to take. So their background will not only have a major impact on an organisation's performance, but also on its reputation.

Carry out a due dilligence check of the administrators

Does the director have a mandate in other companies? Has he or she managed other companies in the past? What is the current situation of these other companies? Is that person a trustworthy indivudual? Are they political exposed? Are they involved in cases  money-laundering? If the entrepreneur or director had mandates in several companies that went bankrupt, this may be a sign of voluntary maladministration.

Moreover, you should be extremely careful if your contact person is/was subject to sanctions, fraudulent bankruptcies and other shady cases. The reputation of you and your company may be at stake.

Find out who the ultimate beneficial owner (UBO) is

The ultimate beneficiary or "Ultimate Beneficial Owner" (UBO) is the person who owns at least 25% of the shares or voting rights, or has a decisive mandate on the board of directors.

All companies in Belgium are required to disclose the identity of their UBOs in a central register to combat fraud and terrorist financing. The aim is to prevent rogue individuals from hiding behind a company name to carry out fraudulent transactions. Therefore, we advise you to systematically verify who is the UBO of the company you are about to do business with. 

Identify a possible group structure

If the company is part of an international group, this strengthens the reliability because it is more robust and stable. However, don't forget to check the linked organisations to avoid any risks, should any member of the structure be involved in questionable business.

The press or the adverse media is also a good source for identifying potential issues.

Tip: you can simplify your Customer Due Diligence screening or your KYC Check and the overall compliance audit with the all-in-one platform Protect from Creditsafe. Access global adverse media, PEP profiles, sanctions lists and enforcement databases through a single search with Creditsafe Protect.

Conduct further research here

Chapter 1

Check the delivery address of your professional customer

By doing a quick check on the Creditsafe platform, you can immediately retrieve the official address of a company and its different branch offices (if applicable).

This information is useful to know if the company really operates in the place where it claims to be.

Check the registered company address
Every company is obliged to provide an official business address. For large companies, this will often be the head office, while smaller companies more often choose the address of their accountant or the private address of their supervisor.

Check the delivery address
Before you deliver goods or services to a customer, we advise you to always check if the delivery address corresponds with the address mentioned in a Creditsafe report or in an official trade register.

If you cannot find any information that allows you to match the delivery address with the company name, you may be dealing with a fraudulent organisation or perhaps a dummy cooperation.

Using Google Maps
You can use Google Maps and Google Street View to check the location of a company. If you see an apartment building or a house at the address provided, caution is advised. 

Chapter 1

Analyse the financial performance of the company

Although not everyone can handle a financial analysis well, it is essential to assess the performance of your own company and that of your business relations.

Specific financial performance indicators allow you to measure the solvency of a company in order to make the right decisions. In this way, you identify possible future problems or perhaps new business opportunities.

Although not everyone can handle a financial analysis well, it is essential to assess the performance of your own company and that of your business relations.

Specific financial performance indicators allow you to measure the solvency of a company in order to make the right decisions. In this way, you identify possible future problems or perhaps new business opportunities.

Analyse the company's financial accounts

Many companies have to file their annual accounts with the National Bank of Belgium, depending on the number of employees and turnover.

When consulting the annual accounts, you should pay attention to the following key items in the income statement: turnover, purchases, costs and the different performance results compared to previous years. In the balance sheet, the focus lies on equity, receivables, debts and cashflow.

However, this verification is a little more challenging when you are dealing with young SMEs or sole traders. They are not immediately subject to this obligation and only have to submit their annual accounts in abridged form. As a result, you have no insight into the entire balance sheet of such a smaller structure.

In this case it can be useful to rely on business information from a third party. Creditsafe takes into account a large number of other parameters to deliver a credit risk assessment or indication.

Beware of a negative payment history

Has the company been subject to legal proceedings before the Commercial Court? Has it been charged by the NSSO for non-payment of social security contributions?

The presence of such a history may be a reason for financial mismanagement or a bad attitude on the part of the company. If these elements keep recurring, 100% caution is advised.

Creditsafe also shares the payment data in its credit reports. This way, you can easily determine whether a professional customer pays in general on time or not. Creditsafe also gives an overview of the invoices which are due and are beyond terms.

Want to investigate a business relationship?