The benefits of vetting new clients
Every entrepreneur has one client horror story that taught them hard lessons. Although avoiding situations that leave you with a horror story of your own is harder than it seems, there are things you can do to minimize the chances of this happening. Vetting entails investigating a potential client, individual, or business, to find out everything you can about them. The information you find will help you make the right decisions about a client. Below, we will look at other benefits of having a closer look at a potential client before moving forward.
Vetting tells you who you are dealing with
Vetting gives you a better understanding of a potential client. The first thing you should always be on the lookout for is whether they are trading legitimately in your jurisdiction. If they are not, you risk being tied into lawsuits and other types of problems that you might not know about.
Vetting also lets you know if the client will take advantage of you. A common way some clients do this is by expanding the scope of work and threatening to sue if you do not accommodate them. Through vetting, you can find out if these issues will present themselves in the future.
Vetting ensures you get paid
Every for-profit business exists to make money. It is therefore in a business’s interest to ensure the clients they accept will pay them when the time comes. The best way of knowing this is by finding out as much information about the company as possible. Vetting new clients in this way will involve seeing how many years they have been in business, their size, and information about the business.
During this process, you should also be looking for some high-risk characteristics. These include things like unusual transactions or being vaguely opaque with their managerial structure. Companies that exhibit these characteristics can disappear without warning.
While you could decide to manually vet every client to ensure they will still be around when the payments are due, automation can help you do it faster and better. Tools like Cognito are the future of business verification and due diligence. Cognito helps you find different types of business information including locations, social media presence, filings and registrations, and more to ensure you know the business well before taking them on as your clients. You can learn more details here.
It gives you some legal protection
When you are a client, you learn everything there is to know about them. If you ever decide to take legal action against them, you have enough information about them to make your case stronger.
However, if they have no problem letting you look into their company and signing reasonable contracts and agreements, it is unlikely that you will have any problem with such clients in the future.
Every business or entrepreneur must vet new clients before taking them on. Vetting protects your business and ensures you know exactly who you will be dealing with. Vetting also increases the chances of you getting paid by giving you a general idea of how financially liquid a new client is.
