It may seem like an obvious question but a lot of companies do not know who their customer is. You have dealt with the same people and the same clients for 5 years but do you know anything about the company’s legal entity. The reason that you need to know this information is important, if your customer stops paying you and you need to take further action, knowing how their business is structured may prevent you experiencing issues with unresolved debt.

There are a lot of different structures for businesses but it is important to familiarise yourself with some of the most common.

Sole Trader

A sole trader is an individual, not a company, that is the owner of the business. If the business was to fail, then it would be the individual that would face bankruptcy and be liable for any debts owed. As a sole trader, there is no obligation to submit annual accounts so you may benefit from carrying out personal credit checks on them.


A partnership is like a sole trader in that all partners are jointly liable and responsible for any outstanding debt. Some partners may have more liability than others and some may not be involved in the day-to-day running of the company.

Limited (LTD) Company

A limited company is separate from its directors or shareholders. It has its own bank account and more importantly, its own credit rating. It is important to check how long a company has been trading and its credit report. Commercial Domestic Investigations offer a credit reporting service that can help inform you of your client’s previous payment history and can be a vital business tool that assists businesses with cash flow management, which can help to grow your business.

If a limited company ceases trading, is liquidated or dissolved before paying off any debt. A director or shareholder is not liable for any debts unless they have signed a personal guarantee.

Public Limited Company (PLC)

A PLC is owned by shareholders and these shares are available for purchase by the public. As with a LTD company, acquiring a credit report on a PLC may save you from some serious payment problems in the future. There is usually a lot of information available on PLC’s through financial presses and websites.

The best way to get to know your client is to begin with a credit report, it isn’t too late to carry out a search on your current clients. Commercial Domestic Investigations has a specialist reporting team that provides clients with the best advice available, making the decision to accept business easier. If you are looking for assistance with credit reporting, contact Commercial Domestic Investigations on 08444 159200 or email