In our industry things change very quickly. New companies, new products and new services pop up constantly and offering the best service to your clients often means engaging with a multitude of different 3rd parties be they individuals or larger companies. Whether you seek these out yourself or are approached in the first instance, it can be difficult to know who you should or shouldn’t do business with, which is why it’s always important to carry out some due diligence into any 3rd party you think about engaging with.
Conducting due diligence on a company level is not unlike doing the same for your clients. First and foremost, you’ll want to make sure the person or entity you’re doing business with is who they claim to be and will deliver on any contracts or agreements you enter into. You will also need to develop an understanding of what the company does, what services and products are offered and how these benefit and affect you and your clients. You may also need to take extra steps where it concerns a company by looking into things like finances and directors via Companies House.
As said already, new companies pop up all the time and in fact, the Society has proudly helped support and launch various start-ups over the years so we’re no stranger to this statement. Whilst newly formed or even recently rebranded companies shouldn’t immediately give any cause for concern, you should still check what history you can in case there are reasons for anything beyond the company simply being a start-up or having just gone through a rebrand. In a continually evolving industry accelerated by things such as the pandemic and even regulation in other sectors, companies are undoubtedly going to be looking to capitalise on opportunities which may arise. As such, you may also want to investigate why a company is suddenly changing its product or service offering, and perhaps also the reasons behind why they’re suddenly seeking out you or your business.
Ultimately you should always check the terms of any agreement you enter into carefully to ensure you fully understand the obligations of all parties involved, giving particular thought to the possible ramifications should the relationship break down or terminate unexpectedly. Those of you working in larger firms may also need to speak with partners or board members before putting pen to paper. You might also consider seeking legal advice when entering into any contract with a 3rd party to check the terms, as well as engage an independent firm to carry out due diligence checks on your behalf before making a final decision.
Whilst this brief article is by no means an extensive guide into conducting due diligence, we hope it at least provides some food for thought when engaging with 3rd parties in business.