Before You Sign: A Seven-Point Health Check for Your Next Supplier

Most UK businesses spend more time choosing a new laptop than choosing a new supplier. It is an odd imbalance, given that a poor trading partner can disrupt operations, damage your own reputation with customers and, in the worst cases, leave you exposed financially. Due diligence need not be laborious. Below are seven checks we recommend before putting pen to paper — the same standards, incidentally, that we hold ourselves to at Hings Ltd.

1. Verify the Company's Registration and Filing History

Start with Companies House — it is free and takes minutes. Confirm the registered number, check the incorporation date against how long the firm claims to have traded, and review the filing history. Late or missing accounts and confirmation statements are a recognised warning sign. Note the registered office address and the directors listed; a quick search of their names can reveal other appointments, including any struck-off companies.

2. Examine the Financial Picture

For anything beyond a one-off transaction, request recent accounts or a credit report from an agency such as Experian Business or Creditsafe. You are looking for consistent filing, reasonable liquidity and no history of county court judgments. For smaller firms with abbreviated accounts, a trade reference or bank reference can fill the gap. A confident supplier will not resent being asked.

3. Confirm Insurance Cover

Ask for certificates of insurance directly from the broker, not screenshots. At minimum you should verify public liability and, where relevant, professional indemnity and employers' liability cover. Check that the limits are proportionate to the contract value and that policies run to the contract's end date — including any warranty or defect liability period.

4. Check Compliance Credentials and Accreditations

Depending on the sector, look for relevant registrations: Gas Safe and NICEIC for building services, ISO 9001 for quality management, CHAS or SafeContractor for construction-related work, and FCA authorisation where financial services are involved. Verify accreditation directly on the certifying body's public register rather than relying on a logo on a website.

5. Take Up References — Properly

References should be from businesses of similar size and sector to yours, and ideally current clients rather than historical ones. Ask specific questions: Did invoices match quotes? How were problems handled? Would you use them again without hesitation? Two or three well-questioned referees tell you more than any sales presentation.

6. Scrutinise the Payment Terms and Contract Small Print

Review the proposed terms for retention of title clauses, late payment interest, termination rights and liability caps. Under the Late Payment of Commercial Debts (Interest) Act 1998, statutory interest applies by default, but some suppliers attempt to contract out of it. Be equally honest with yourself about your own cash flow — agreeing to terms you cannot comfortably meet helps nobody.

7. Assess Communication Before You Commit

Finally, judge the relationship as you find it. Did enquiries receive a prompt, clear answer? Were you given a named contact? A supplier's behaviour during the sales process is usually their best behaviour — if it is poor now, expect worse once the contract is signed.

Diligence as Standard Practice

None of these checks is onerous, and together they take perhaps half a day. That is a modest investment against the cost of a failed partnership. At Hings Ltd we welcome scrutiny: our Companies House record, insurance documentation and references are available to prospective clients on request, because a partner confident in their own house has nothing to hide.