Assessing a Company's financial robustness
Discussion
We are setting up an Approved Supplier List that budget holders can procure goods and services from As part of the selection/appointment process we want to be able to assess a company's financial strengths, its trading history, and whether the Directors have anything dodgy in their backgrounds like phoenixing, CCJs etc
Would a D&B or Experian report be able to provide his info?
Would a D&B or Experian report be able to provide his info?
Countdown said:
Would a D&B or Experian report be able to provide his info?
Only up to a point.Despite recording consistent profit year on year, having decent cash reserves, dealing only with public sector and paying suppliers the day I get their invoice, my company's ranking on Experian is 'average' because it has no debt record. Whereas my friend's HR consulting business is forever facing liquidation, regularly runs out of money and exists on a wing and a prayer but because he has a couple of business loans, his company ranks better than mine.
I typically do the following when assessing suppliers:
- Using credit reports as just one data point among many when assessing suppliers
- Focusing more on the detailed components of the reports (like payment history, CCJs, director histories) rather than the overall score
- Potentially requesting additional financial information directly from suppliers (like bank statements or management accounts) to get a more complete picture.
For single source or critical supplier, I would look at some more meaningful indicators of their financial health:
Operating Metrics:
- Cash flow from operations (not just profit)
- Working capital ratio and trends
- Customer concentration (risky if too dependent on few customers)
- Length of client relationships, especially with similar organizations
- Supplier payment track record (you could ask for references)
Business Stability Indicators:
- Length of time in business
- Staff turnover rates, especially in key positions
- Professional accreditations and industry memberships
- Insurance coverage levels
- Quality of their own supplier relationships
Public Records and Verification:
- Companies House filings (can reveal patterns not obvious in credit scores)
- VAT registration status
- Professional/trade body memberships
- Health & Safety records
- Relevant ISO certifications
Contract-Specific Assessment:
- Financial capacity relative to contract value
- Evidence of similar successful contracts
- Key staff availability and expertise
- Business continuity arrangements
- Subcontractor relationships if relevant
- Using credit reports as just one data point among many when assessing suppliers
- Focusing more on the detailed components of the reports (like payment history, CCJs, director histories) rather than the overall score
- Potentially requesting additional financial information directly from suppliers (like bank statements or management accounts) to get a more complete picture.
For single source or critical supplier, I would look at some more meaningful indicators of their financial health:
Operating Metrics:
- Cash flow from operations (not just profit)
- Working capital ratio and trends
- Customer concentration (risky if too dependent on few customers)
- Length of client relationships, especially with similar organizations
- Supplier payment track record (you could ask for references)
Business Stability Indicators:
- Length of time in business
- Staff turnover rates, especially in key positions
- Professional accreditations and industry memberships
- Insurance coverage levels
- Quality of their own supplier relationships
Public Records and Verification:
- Companies House filings (can reveal patterns not obvious in credit scores)
- VAT registration status
- Professional/trade body memberships
- Health & Safety records
- Relevant ISO certifications
Contract-Specific Assessment:
- Financial capacity relative to contract value
- Evidence of similar successful contracts
- Key staff availability and expertise
- Business continuity arrangements
- Subcontractor relationships if relevant
paddy1970 said:
I typically do the following when assessing suppliers:
- Using credit reports as just one data point among many when assessing suppliers
- Focusing more on the detailed components of the reports (like payment history, CCJs, director histories) rather than the overall score
- Potentially requesting additional financial information directly from suppliers (like bank statements or management accounts) to get a more complete picture.
For single source or critical supplier, I would look at some more meaningful indicators of their financial health:
Operating Metrics:
- Cash flow from operations (not just profit)
- Working capital ratio and trends
- Customer concentration (risky if too dependent on few customers)
- Length of client relationships, especially with similar organizations
- Supplier payment track record (you could ask for references)
Business Stability Indicators:
- Length of time in business
- Staff turnover rates, especially in key positions
- Professional accreditations and industry memberships
- Insurance coverage levels
- Quality of their own supplier relationships
Public Records and Verification:
- Companies House filings (can reveal patterns not obvious in credit scores)
- VAT registration status
- Professional/trade body memberships
- Health & Safety records
- Relevant ISO certifications
Contract-Specific Assessment:
- Financial capacity relative to contract value
- Evidence of similar successful contracts
- Key staff availability and expertise
- Business continuity arrangements
- Subcontractor relationships if relevant
What industry/sector do you work in because I’d love to have the time to ask this of my suppliers. I’ve also never been asked half of this on the flip side.- Using credit reports as just one data point among many when assessing suppliers
- Focusing more on the detailed components of the reports (like payment history, CCJs, director histories) rather than the overall score
- Potentially requesting additional financial information directly from suppliers (like bank statements or management accounts) to get a more complete picture.
For single source or critical supplier, I would look at some more meaningful indicators of their financial health:
Operating Metrics:
- Cash flow from operations (not just profit)
- Working capital ratio and trends
- Customer concentration (risky if too dependent on few customers)
- Length of client relationships, especially with similar organizations
- Supplier payment track record (you could ask for references)
Business Stability Indicators:
- Length of time in business
- Staff turnover rates, especially in key positions
- Professional accreditations and industry memberships
- Insurance coverage levels
- Quality of their own supplier relationships
Public Records and Verification:
- Companies House filings (can reveal patterns not obvious in credit scores)
- VAT registration status
- Professional/trade body memberships
- Health & Safety records
- Relevant ISO certifications
Contract-Specific Assessment:
- Financial capacity relative to contract value
- Evidence of similar successful contracts
- Key staff availability and expertise
- Business continuity arrangements
- Subcontractor relationships if relevant
I don’t believe you.
Think I’ve caught my first ‘bot’. Especially when looking at the rest of your posts
Dg504 said:
What industry/sector do you work in because I’d love to have the time to ask this of my suppliers. I’ve also never been asked half of this on the flip side.
I don’t believe you.
Think I’ve caught my first ‘bot’. Especially when looking at the rest of your posts
I just looked at all "his" posts over the past 3 months - ALL of them have the same format with the tell-tale unnecessary commas throughout them and written in a non-human way. That is 100% a bot program writing those posts. I'd bet my house on it, genuinely.I don’t believe you.
Think I’ve caught my first ‘bot’. Especially when looking at the rest of your posts
The fundamental problem is that a company which looks financially sound today could be in deep doo-doo tomorrow.
For this reason all I would look at is the long term history if their filings at Companies House, which you can do yourself at no cost.
How long has the company existed?
How long have the directors been in place?
Do the directors own the shares?
Do all the directors have the same last name?
What's the company's financial history shown in the accounts?
Once you're in there you can also look up the past and present "other directorships" of the directors and, if you feel so inclined, similarly review those companies.
For this reason all I would look at is the long term history if their filings at Companies House, which you can do yourself at no cost.
How long has the company existed?
How long have the directors been in place?
Do the directors own the shares?
Do all the directors have the same last name?
What's the company's financial history shown in the accounts?
Once you're in there you can also look up the past and present "other directorships" of the directors and, if you feel so inclined, similarly review those companies.
Tisy said:
Dg504 said:
What industry/sector do you work in because I’d love to have the time to ask this of my suppliers. I’ve also never been asked half of this on the flip side.
I don’t believe you.
Think I’ve caught my first ‘bot’. Especially when looking at the rest of your posts
I just looked at all "his" posts over the past 3 months - ALL of them have the same format with the tell-tale unnecessary commas throughout them and written in a non-human way. That is 100% a bot program writing those posts. I'd bet my house on it, genuinely.I don’t believe you.
Think I’ve caught my first ‘bot’. Especially when looking at the rest of your posts
JQ said:
Out of interest, anyone know what the purpose these bots? Who is running them?
I am not saying this is the case here but a Bot could increase post count and drive engagement, increasing page views and leading to increased advertising revenue.On other matters they can "flood the zone" with a certain a point of view.
Panamax said:
To my mind any post that includes words like "industry body accreditation" or "financial capacity relative to contract value" can safely be ignored, whatever its source!
Funnily enough they were two that made sense to me- e.g. we wouldn’t give a £100m contract to an organisation who turnover £100k a year (imaginary numbers but YKWIM). Equally for some contracts I would expect there to be some kind of professional body membership.However “staff turnover “, “relationships with suppliers “ etc is just unrealistic not to say weird. What bidder is going to reveal that?
It’s funny though
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