Reputation and client due diligence

[JustAnotherNomad]

I understand a lot of people here may be doing B2C only (ecommerce etc.) or offer some other way of "mass market" product (SaaS etc.). Or maybe they only they sell their own time as a freelancer.

But for those who offer B2B services with employees - aren't you concerned about reputation? Don't clients ask for financial information about your companies?
"Oh, I have a BVI company, we don't have to keep books..."
"I have a transparent US LLC, there basically aren't any substantial reporting obligations, sorry, can't show you a balance sheet."

Many clients do their own due diligence and they want to know who they're working with, who owns this company they're considering giving access to their confidential business information.
"Sorry, I can't prove I'm actually the manager of this company, just believe me, it's true!"

Wouldn't it often be better to pay some tax, but have a company in a reputable jurisdiction and be able to show that you're actually profitable and won't disappear after your client has made the first payment?

 

[thomasparra]

That's why Ireland and to a lesser extent Romania, and Bulgaria exists in the EU. Plus you can always create local companies to bill local clients if they feel more comfortable with it. That's what everyone is doing with their holdings and local subcompanies.

Last edited: Jun 28, 2023

 

[JustAnotherNomad]

Yeah, you can use local companies for billing, but then those wouldn't necessarily show the full revenue and you would open yourself up to a tax risk.
Ireland also requires a director in the EU - or if you don't have that, you have to pay 25k or so as a guarantee.
I wouldn't say that Romania and Bulgaria have very good reputation and books would probably be in local languages? Clients would probably ask for a balance sheet in English, so UK/Ireland/Cyprus/Malta might be better.

 

[Au999]

B2b services (marketing) for me has never been an issue and no clients have ever requested any information on company finances in 20+ years. Neither as UK limited, or US LLC to UK limited, or US LLC to Dubai FZCO.

All they care about is results - and as we don't take any payment until they get results it seems they truly dont care

 

[jafo]

I used to think this way, notwithstanding my gut feelings and many other visible signs.

The last lesson for me came by way of the dotcom bubble. Audited financials up the .... BUT...

I ended up with this mantra: "I don't care what color the cat is, as long as it can catch mice." 😎

That should summarize it all. Substitute cat and color with any noun you would like.

 

[JohnnyDoe]

jafo said:
Audited financials
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I know and have worked with auditors that are very flexible and easy to incentivize. It's all fugazi”¦

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[jafo]

JohnnyDoe said:
I know and have worked with auditors that are very flexible and easy to incentivize. It's all fugazi”¦
Click to expand...

Did someone say Arthur Andersen? Say it louder for the people in the back of the room still asleep rof/%

JustAnotherNomad said:
But for those who offer B2B services with employees
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BTW...I do B2B only (except unless someone I know needs a favor).

I have ZERO employees. I do everything myself. Keeps me young and active. If I need employees I use the employees of my suppliers.

 

[Cloudbanck]

I do B2B and clients don't care. I still do my annual balance sheet and PnL statement cause I like to keep track of things, but no client has ever asked for them.

 

[JustAnotherNomad]

I have met clients who do care. It may simply be a formality for them to look at the numbers, but they are definitely interested. I have a setup that works, but I've been wondering how others do this.

 

[EliasIT]

JustAnotherNomad said:
Many clients do their own due diligence and they want to know who they're working with, who owns this company they're considering giving access to their confidential business information.
"Sorry, I can't prove I'm actually the manager of this company, just believe me, it's true!"
Click to expand...

I have only been asked this a few times but no one has asked for proof.

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[JohnnyDoe]

JustAnotherNomad said:
Don't clients ask for financial information about your companies?
Click to expand...

If a prospective client asks for this, I would consider him a timewaster or a psycho/undercover tax agent.
You don't do business with a company based on its financials.

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[thomasparra]

It is indeed weird to ask for financials unless you enter some type of financial partnership or long term agreement on the sales of goods or services with your client.

I am telling you this as I managed the strategic partnership of a B2B services company with one of the largest investment banks out there resulting in a low 8 figure investment. We supplied 6-7 figures worth of services to them beforehand and they never once asked for financials before the partnership. However they care about compliance and rule of law but it is not too hard if you are in a normal jurisdiction like Ireland, HK, SG etc.

 

[EliasIT]

Btw. isn't it someone can look up in the most business & company databases public available?

Toggle signature
If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability!
My personal favorite thread posted in the Mentor Group. Group of investment companies to avoid licensing.

 

[JustAnotherNomad]

That's the thing. I do business where everything is very transparent, so it's not unnatural for clients to ask for such information since they could otherwise just look it up online.