We all know how important it is to have trust in our suppliers and supply chain. This includes basic and explicit elements like doing job they are employed to do as agreed with you and to do it with competence and act professionally at all times.
However what happens when behind the scenes when one of your trusted suppliers changes some details that may not be obvious to you such as changing the form of the business, significant and / or wholesale changes to the board or shareholders?
Business Name Changes
Business laws in the uk allow a limited company to go into liquidation and set up a new company the next day with the only apparent change being the name. This is relatively common but isn’t always a apparent to you or indeed it’s effects.
There may be some good reasons for doing this but equally there may not be.
Either way the due diligence obligation for you, the business owner, is to monitor the situation, check the implications of these circumstances and make an informed decision about your relationships with this supplier.
Buyer Beware…Pay attention to the details
In the age where many things are judged on their visual appearance as opposed to the substance it is very easy for apparent small visual changed to be made but which have potentially big and serious implications on your business.
Things are not always as obvious as they seem.
Checking a company website is hardly an authoritative check. It’s very easy (especially in a more cynical situation) to change a company website come with a snappy new title , which is then somewhat related to the previous name such as the initials or addition of ancillary words in an effort to hedge their bets to be a safe distance from the original company but still be recognisable to exiting customers and and not raise any alerts.
Yes we have all seen it happening. create a fictitious source to demonstrate the point
- Previous name: XYZ123 Web Design
- New Name: XYZ Creative or We are XYZ or XYZ Digital
Why the name change?
It could be legitimate due to a rebranding, change of personnel or it could be a bit more than that……….financial trouble, boardroom power struggle or worse>
Due Diligence is an ongoing process
Ask the management person/people who you have relationship about the changes, what it means to you and the provision of services to you.
Credit Check Suppliers
Using credit check and other credible sources will help you build a picture of the actual status of the business
Companies house is a good source of official information. You will get good basic facts about the companies operating ad limited companies in the UK containing information about shareholders, directors, dates of appointment, changes etc
business and stakeholders.
While you will get qualitative facts you always have to be aware that financial information is hard to interpret. Speak to your accountant and discuss what they means. You may not get the answers but at least you will establish what questions you want to ask of your supplier.
Ask why the name change
Changes in supplier business status can occur for the most benign reasons however they can also indicated something more sinister. The company official name, branding, marketing information is always throw a positive spin on the situation so you need to dig deepens into the facts about why the changes took place.
At the worst case a company has changed hands completely (technically they don’t need to inform you of hey he details) and the person you had a relationship no longer has a role or even relationship with the company. Now you have to ask who you are dealing with and what the changes have been made.
Perhaps it’s time to review your relationship and go to market again to
The onus is in you to keep on top of tees circumstances and make sure you still get what want
As ever it is a case of Buyer Beware (of supplier name and business format changes)