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Consulting Engineers

Are you protecting your business with due diligence checks?

Do you carry out due diligence on your potential clients before you take them on?

I would guess that the answer to that question depends largely on whether you have been burned in the past.

After a number of years of running my structural engineering business, Super Structures Associates, I’ve found that most of my customers give me absolutely no cause for concern. However, like most business owners, I’ve certainly had one or two issues with customers over the years.

When things go well – and we don’t come across any difficult customers – we can become blasé. But it’s very important not to let this happen, and to run the relevant checks on every potential client.

There will always be some people who don’t pay their invoices on time. We work in a sector where late payment is a known problem.

And very occasionally I have the misfortune to work with someone who won’t take my advice. This is serious, and I won’t continue working with someone if I believe they may be putting people or property at risk with their building methods.

But carrying out certain checks makes it less likely that problems will arise. These days, when an individual or a company approaches us to quote for work, my PA will carry out due diligence on them.

The level of due diligence depends on the size of the project, the type of client, and whether or not we have an existing relationship with them.

We’re checking to see if this person or company is who they say they are.
When things are going well, due diligence might seem like overkill. But it helps to protect you and your business from risk.

I can’t tell you exactly which checks you should carry out. You need to look at what is important to you to help you feel comfortable that you’re working with reputable clients that won’t disappear or delay payment. One good place to start is to check that the address they’ve given you is a physical address and not a virtual office. If it’s not a physical address, then you or someone in your team needs to do some more checking.

Although you should be doing your due diligence ahead of working with a client, there are some red flags to look out for when the project starts. For example, if the first invoice isn’t paid on time that can be a warning sign of either a disorganised customer, or more trouble to come.

What other warning signs have you seen, ahead of a client becoming troublesome? What checks do you carry out? I’d be interested to hear how in depth your due diligence checks are.

And if you need any assistance from a structural engineer, please do get in touch.

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