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  • #988317
    Caddy
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    Hi.

    So i have a potential client that wants to do business with us which is a considerable turnover however they are asking us about our Financial Health and want supporting documents to assess risk with doing business with us.

    I am a little confused that my “potential client” wants to know our financial situation when they are the one’s purchasing from us.

    Of course i can see the point where they need to ensure that we are a well established business and wont go missing overnight because they rely on our products but at this point in time there is no way i’m handing a potential client our financial records of any sort as i really think its irrelevant to them purchasing from us and doesn’t matter what our annual profits are, or how much is currently in our bank account.

    At this point in time i have told them we do not share any financial information.

    Thoughts?

    #1166666
    LucasArthur
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    Hi Caddy

    Personally, i would find it difficult to answer your question on the information provided in detail.. Reason is that some sectors and depending on the relationship being forged may require mutual disclosure of sorts.

    May i ask, have they offered you there financial records or are they a publicly listed company?

    In my past careers, i have had to disclose certain confidential information about companies i represented to parties we intended on partnering with. Reasoning was purely based on the exposure of BOTH businesses with the products being offered, our client was investing MILLIONS into advertising, promotional materials and systems integration and needed to know that we too were sound. Likewise, we were also investing heavily into subsidies, back end integrations and setting up dedicated staff for our client and as a result we too wanted personal guarantees from them and wanted to see their books (well not forensically but thoroughly enough)…

    It will be interesting to hear others input, i know i have not answered it at all and there is so much information and reasoning behind a request like that that without knowing your circumstances intricately its difficult to 100% conquer your query.

    You may also want to seek advice from your Accountant or Legal Representative if it is a large financial windfall you are passing up to see what other people in similar situations would do and if it is common practice in your field.

    Kind regards
    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1166667
    Caddy
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    Thank you for your reply,

    Dealing business to business is fairly new to us, generally we are dealing with retail sales!

    They have since come back to us and said they can understand that we don’t want to provide specific financial information and are happy for our accountant to provide something that will basically back up that we are well established and stable.

    Hopefully a letter from our accountant will suffice.

    #1166668
    LucasArthur
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    Caddy, post: 192990 wrote:
    They have since come back to us and said they can understand that we don’t want to provide specific financial information and are happy for our accountant to provide something that will basically back up that we are well established and stable.

    Hopefully a letter from our accountant will suffice.

    This is another ‘common’ form that a third party (accountant) provides a blanket letter saying said company is of sound operations.. Although in todays market, and i am sure some accountants will clarify, i am not sure how ‘solid’ this is as things can turn quite quickly :(

    Lots of supporting facts such as length of business, operating time, assets and all other such things will have merit.

    Cheers
    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1166669
    Divert To Mobile
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    Hi Caddy,

    Depending upon the level of dependency they will have on your products part of their risk assessment would be to evaluate the risk of their supplier going out of business.

    You might find a simple letter from your accountant saying your a stable business and how long you have been trading will suffice.

    Steve

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