In order to clarify some aspects surrounding due diligence, I decided to write down some of the most dangerous situation one may encounter in his business life.
The list below refers to third parties.
- Introduced by a public official as it may represent an indirect bribe,
- Seems not to have sufficient staff and/or means to carry out its tasks (you should evaluate personnel qualifications, avoid companies relying only on virtual offices or whose address is a simple mailbox),
- Recently incorporated and lack of references,
- Prefers working without a written agreement,
- Unjustified advanced payments requests (if cash is explicitly requested or wire transfers shall be made to other entities, you should really worry),
- Unusually high/low commissions compared to standard business practices,
- Inaccurate invoices (description of services provided, fiscal information don’t match the information provided in the contract, expenses not documented),
- Hidden subcontractors (you should always be informed and, eventually approve them after appropriate due diligence),
- Charity, offsets, sponsorship requests,
Besides the aforementioned, you should also pay attention to the way your counterpart communicates with you:
- Refusing written communication is highly unusual,
- Persons not mentioned in the company registration data seem to be in charge of the organization,
- Promises of success even when inappropriate (i.e. public contracting),
- Lack of anti bribery and corruption policy and training.
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