Confirming Customers to Protect Company from Risk

Technology | 23 Oct, 2014 |

As security breaches and scams become more and more prevalent with the advancement of technology, it is more important for companies to protect against fraud. Extending credit to customers can be a risky venture for a number of reasons, but being smart and taking precautions can help prevent problems down the road.

For most companies it requires getting to know the customers and verifying their legitimacy. This does not mean you must conduct a full background check or incur a large expense. Validating a customer can be done through a few simple steps:

Utilize the Internet

A quick Google search can reveal a lot about a potential customer. Visit their website and social media pages to see if they’re active, become knowledgeable on their business practices and learn their mission statement. You might also consider checking the LinkedIn or Facebook profile of the business contact you’ve corresponded with. If your contact’s profiles say they work in a different location or for a different company, you might have stumbled upon a red flag.

Drive by their physical location

Verifying the physical location is one of the best, and simplest, ways to prove a company’s existence. If visiting the building is impossible or impractical, take advantage of Google Maps to see a view of the building. If you see a dirt lot or a building belonging to another company, you’ll have discovered a major warning sign. Listing errors and location changes happen, but it’s important to gather as much information as you can when working with a new client.

Get to know the primary owners and officers

It might not always be feasible to meet a company’s owners and officers face-to-face due to busy schedules and distance, but if you can, these meetings can be extremely beneficial to your business relationship. In-person meetings help confirm the legitimacy of the customer or client. If it is not possible to meet, try to speak with as many of the company’s key leaders as you can by phone or video conference.

Check state databases

Your state’s Secretary of State Department maintains a database of public businesses that have secured a business license. Anyone is able to access the database online, which is a great resource for business owners extending credit or loaning cash. In Arizona, this database is called the Registered Name Information Search. It contains information such as the business owner’s name, the address, the type of business, and the status of the business license.

Verifying a potential client is a non-negotiable task when considering new partnerships. Taking the time to do the research and ask the important questions can save your company from costly mistakes and serve it well in the future. It’s also valuable to review the companies you do business with once a year, as validity, financial situation and ethics can change.


Robyn Barrett is founder and managing member of FSW Funding, specializing in factor financing for small to mid-size companies. For more information, visit

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