Be proactive: use Companies House to your advantage
It is an all too familiar story. A client calls with a new debt recovery matter, only to find out that the debtor has no money; a frustrating discovery whatever the amount incurred.
Whilst sometimes this is simply unavoidable, one way to help limit these occurrences is to check the Companies House records before contracting with a new corporate customer or supplier. Whilst there has always been a wealth of information on www.companieshouse.gov.uk to assist with such investigations, now it’s free – you don’t even need to register.
Some of the more relevant records include:
- Incorporation date;
- Annual Returns (to find out who the directors and / or owners of a company are);
- Filed Accounts to see if there is any money (ok, ok, these are often a year or so out of date, and subject to the “dark arts” of accountancy, but they can still provide an indicator);
- Charges & mortgages over company assets can show if there may be anything left following an insolvency situation;
- Changes of address, notices of appointments and resignations of directors;
- Insolvency notices such as those informing of a winding up the company, or that administrators have been appointed
So what can you gleam from these records? What are the warning signs?
In terms of the company itself, are the accounts and / or annual returns frequently overdue? Are there insolvency notices in the London Gazette? What about multiple charges or mortgages over company assets or an overly complicated group structures? What about proposals to strike off the company? Even numerous frequent changes in address, or the fact a company is brand new could raise questions.
As for directors, a lot can be learnt from reviewing their personal records too (yes, they’re free on Companies House these days too). Does a director have numerous appointments (or former appointments) for defunct or struggling companies? If so, this may again be a good reason to investigate your new customer more carefully. If you don’t do it already, consider paying for a full credit check or ask for trade references?
Whilst there are rarely 100% guarantees on entering into a trading relationship with a new client, simple 5 minute checks of the readily available information at Companies House can at least give you an idea as to whether you need to consider asking more questions before jumping in.
5 minutes spent and a few more questions asked at the start of a job, can save money and a headache later on!