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7 Reasons to Run Background Checks on Suppliers & Clients

By: SmallBizClub


Young man shopping or working in a hardware warehouse standing checking supplies on his tablet.

Everyone knows companies run background checks on prospective employees. Companies want to be sure they are hiring people that do not have a history of criminal activity and who will positively represent their brand. However, did you know many companies also run background checks on their vendors and even clients? Read on to learn why checking on suppliers and customers is becoming more common.

Check Licenses

Running a background check on a third party vendor is essential in determining a company’s work history and verifying they are licensed. You want to make sure a vendor’s license is current and that they do not have a history of probationary periods from wrongdoings. Consider using Check People to locate all public records with their easy-to-use platform.


Many companies will shut down due to negligence, bankruptcy, etc. and then reopen under a new name. A comprehensive background check will pull a company’s complete history, including if they used to do business under a different name. A background check allows a business to ask a vendor about this history and can make them aware of potential wrongdoings in a vendor’s past.

Customer Reviews

Running a background check on a potential supplier should show past customer reviews and give a company an idea of the vendor’s ability to complete contracted work on time. 

The presence of several excellent reviews is essential and shows that a vendor has a history of exceeding customer expectations and is trustworthy. Do not be deterred by 1 or 2 bad reviews. Any company is going to run across a client that cannot be satisfied, and seeing a negative review makes the business more legitimate. Hundreds of five-star reviews could indicate a company is paying for positive reviews.

Shows Due Diligence

According to the Fair Credit Reporting Act, a business must let a vendor know they are running a background check on them. Letting a vendor know a business is serious about protecting their interests, and only working with reputable third-party vendors will often deter untrustworthy companies. The people and companies’ you choose to work with directly represent your company’s values, so you want to make sure you are correctly vetting anyone doing business with or for you.

Background Checks on Clients

Running a background check on a potential client is vital for attorneys, freelancers, and for any industry where taking on a client is a significant investment in terms of time and money. 

Confirm a Client’s Identity

When a person signs a contract under a different name, the contract becomes unenforceable. Many clients get away with free work by signing a contract under an alias and then disappearing once the job finishes. This is why performing a background check before completing contracted work is so important. Untrustworthy clients will:

  1. Sign an agreement under a company name that does not exist
  2. Sign on behalf of a legitimate company without being listed as a principal of that company.

You should be able to find records for your clients on the Secretary of State’s website for your state and find evidence that the company is legit and the individual signing the agreement is authorized to do so. 

Find History of Disputes

When a company takes on a new client, there is always a binding contract that outlines the scope of work as well as how a business will receive payment. While these contracts are legally binding, taking legal action against a client that refuses to pay is a headache. It takes time and money- resources that could better serve a client who will pay. Therefore, conducting a background check on a client can uncover if they have a history of refusing to pay and could indicate to a company that taking on a particular client isn’t worth the risk.

Check People

Check People is an easy to use online platform that helps employers, businesses’ and individuals make decisions based on information obtained through public records. Check People can search millions of records using AI software and compile an easy to read the report with relevant information.

Check People is exceptionally intuitive and can find information with a first and last name. Check People then combs through millions of public records, including traffic records, phone book listings, arrest reports, etc. to give you a comprehensive view into an individual’s past. This is especially important for businesses looking to take on new clients. If you are planning on investing a considerable amount of time and human resources into word for a specific client, you want to make sure they do not have a history of criminal activity that could make collecting payment difficult.

Businesses want to be sure they are protecting their interests when it comes to working with a third-party vendor or taking on work from a new client. In today’s digital world, it is easy to pose as someone else. Don’t be fooled. Run a background check.

Published: June 19, 2020

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SmallBizClub.com is dedicated to providing small businesses and entrepreneurs the information and resources they need to start, run, and grow their businesses. The publication was founded by successful entrepreneur and NFL Hall of Fame QB Fran Tarkenton. We bring you the most insightful thinking from industry leaders, veteran business owners, and fellow entrepreneurs. Follow us on Facebook, Twitter, and LinkedIn.

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