How to check the solvency of a company

If you are considering going into business with a new client or a new supplier, you should ideally make sure that this client or supplier will respect its future financial commitments. In order to know whether he will in fact be able to pay you, right down to the last penny, you will have to check out his financial health and solvency. Read on and find out about the different ways and means that will help you to form a general idea of the situation of your future partners.

Is your client’s company solvent?

First and foremost, what does solvency mean? It’s the supposed ability to pay off debts. The liquidity of a company is its ability to pay off current debts immediately. A company may, for example, have a debt of 100 versus assets of 200. Yet, at the same time, it may have only 50 in the bank (as against, say, 150 receivables due from its clients). So it may well be “solvent”, but it still lacks the liquid assets to be able to pay off its debt of 100 immediately.

Liquid assets and solvency are measured by ratios. A common ratio is, for example equity capital /third-Party capital. The more equity covering the borrowed capital, the more solvent the company.

Solvency is readily explained: it describes the relation between equity capital and company liabilities. The calculation is simple. The bigger the equity, the more solvent the company in question.

(You can always consult our glossary on credit report.)

To find out more about a company in just a few short clicks

If you are about to sign a major contract with a new client, it might best serve your interests to first do a little homework to check out, for instance, the solvency of the company. The right tools and a few smart clicks are all it takes to get you vital information about your client.

• Consult the Register of the Crossroads Bank for Enterprises

The Register of the Crossroads Bank for Enterprises collects very clear information. Consultation is free! Just enter the name or number of the business and access the full name of the company, its official address, the VAT number, the enterprise number, the official object of its activity, its management and directors, and any links with the publications of the Belgian Official Gazette, the Central Balance Sheet Office of the Belgian National Bank and the Directory of Employers.

• Consult the annual accounts on the site of the Belgian National Bank

You can also consult the balance sheets on the site of the Central Balance Sheet Office of the Belgian National Bank (https://cri.nbb.be/bc9/); you just enter the number or name of the target company to consult its annual accounts, free of charge. Remember, companies are obliged to publish their accounts on an annual basis. Single-person businesses are not bound by this obligation.

• The Belgian Official Gazette (Le Moniteur Belge / Belgisch Staatsblad)

Any amendment to the Memorandum and Articles of Association or change of official address or directors of the company must be published in the Belgian Official Gazette. Said organ offers online consultation (http://www.ejustice.just.fgov.be/cgi_tsv/tsv.pl) allowing viewing of these publications.

More information

 The initial online searches may have already delivered an interesting overview of your client’s financial situation. However, if you’re still uncertain and you feel it might be better to acquire some further information, there are other places you can go.

• There are companies that specialize in commercial information. They batch information from the Central Balance Sheet Office, the Belgian Official Gazette and certain other sources, adding analysis and sectoral ratio comparison. All this is given in a structured presentation.

• Once you have all the facts and figures in your possession, you can always drop in on your client and fine-tune your analysis. When all is said and done, a company is no more nor less than a group of persons brought together with a view to producing and delivering goods and services. These men and women make the difference and create the environment in which they work.

Conclusion

You will have noted that numerous quite simple, concrete means are at hand to enable you to check out the solvency of a potential client. Don’t forget this step before signing a new contract with a new partner. Seriously though, prevention is better than cure, don’t you think?

How to check the solvency of a company

If you are considering going into business with a new client or a new supplier, you should ideally make sure that this client or supplier will respect its future financial commitments. In order to know whether he will in fact be able to pay you, right down to the last penny, you will have to check out his financial health and solvency. Read on and find out about the different ways and means that will help you to form a general idea of the situation of your future partners.

Is your client’s company solvent?

First and foremost, what does solvency mean? It’s the supposed ability to pay off debts. The liquidity of a company is its ability to pay off current debts immediately. A company may, for example, have a debt of 100 versus assets of 200. Yet, at the same time, it may have only 50 in the bank (as against, say, 150 receivables due from its clients). So it may well be “solvent”, but it still lacks the liquid assets to be able to pay off its debt of 100 immediately.

Liquid assets and solvency are measured by ratios. A common ratio is, for example equity capital /third-Party capital. The more equity covering the borrowed capital, the more solvent the company.

Solvency is readily explained: it describes the relation between equity capital and company liabilities. The calculation is simple. The bigger the equity, the more solvent the company in question.

(You can always consult our glossary on credit report.)

To find out more about a company in just a few short clicks

If you are about to sign a major contract with a new client, it might best serve your interests to first do a little homework to check out, for instance, the solvency of the company. The right tools and a few smart clicks are all it takes to get you vital information about your client.

• Consult the Register of the Crossroads Bank for Enterprises

The Register of the Crossroads Bank for Enterprises collects very clear information. Consultation is free! Just enter the name or number of the business and access the full name of the company, its official address, the VAT number, the enterprise number, the official object of its activity, its management and directors, and any links with the publications of the Belgian Official Gazette, the Central Balance Sheet Office of the Belgian National Bank and the Directory of Employers.

• Consult the annual accounts on the site of the Belgian National Bank

You can also consult the balance sheets on the site of the Central Balance Sheet Office of the Belgian National Bank (https://cri.nbb.be/bc9/); you just enter the number or name of the target company to consult its annual accounts, free of charge. Remember, companies are obliged to publish their accounts on an annual basis. Single-person businesses are not bound by this obligation.

• The Belgian Official Gazette (Le Moniteur Belge / Belgisch Staatsblad)

Any amendment to the Memorandum and Articles of Association or change of official address or directors of the company must be published in the Belgian Official Gazette. Said organ offers online consultation (http://www.ejustice.just.fgov.be/cgi_tsv/tsv.pl) allowing viewing of these publications.

More information

 The initial online searches may have already delivered an interesting overview of your client’s financial situation. However, if you’re still uncertain and you feel it might be better to acquire some further information, there are other places you can go.

• There are companies that specialize in commercial information. They batch information from the Central Balance Sheet Office, the Belgian Official Gazette and certain other sources, adding analysis and sectoral ratio comparison. All this is given in a structured presentation.

• Once you have all the facts and figures in your possession, you can always drop in on your client and fine-tune your analysis. When all is said and done, a company is no more nor less than a group of persons brought together with a view to producing and delivering goods and services. These men and women make the difference and create the environment in which they work.

Conclusion

You will have noted that numerous quite simple, concrete means are at hand to enable you to check out the solvency of a potential client. Don’t forget this step before signing a new contract with a new partner. Seriously though, prevention is better than cure, don’t you think?