Know your customer

In a B2B context, customer vetting is similar to supplier vetting in terms of the checks you may consider running on another business. However, customers present you with the risk of far greater financial exposure. After all, with goods or services rarely paid for up front, you’re effectively giving credit terms to a business that might not subsequently pay its bills.

With goods or services rarely paid for up front, you’re effectively giving credit terms to a business that might not subsequently pay its bills

Thinking of it in these terms, it seems perfectly sensible to check that a business customer is all they claim to be and that they’re not beset by scandal, for example, or in danger of going insolvent. That’s quite apart from the risk of finding you’re illegally doing business with an individual or organisation who features on an international sanctions list.

That last point aside, the dangers here are primarily financial. While uncovering the truth about an inappropriate supplier can leave you with a (temporary) business continuity issue, falling foul of a customer that has been economical with the truth about their business can have significant financial implications for your own business.

By contrast, customer vetting in a B2C environment is clearly focused on an individual, making this type of screening more immediately recognisable. Screening in this instance is typically focused on an individual’s identity and credit history, with a business keen to understand whether they should enter into a financial arrangement with a person, be that opening a bank account, taking out a loan or agreeing a lease.

Typically, speed is of the essence with such checks. With many of these businesses now operating solely in an online environment, they require immediate notification as to whether an individual should be approved or not. The more comprehensive the check, the less likely it is that problematic applications will need to be submitted for a manual – and more time-intensive – review.