Background Checks on Horse Stable Clients

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If you run a horse farm, boarding facility, training operation, a horse breeding business, or any other equine-associated endeavor, you undoubtedly deal with numerous clients when providing services. Relationships developed with clients take time and resources in order to provide the best in horse and client care. When a new client approaches you and asks you to deliver your service to their horse(s), do you jump right in, provide services and assume you’ll be paid? Or, do you do a little investigative research into the financial stability of the client and his or her ability to pay?

Credit: Thinkstock Before entering into a business relationship with a person or another company, conducting a background check is important.

Credit: Thinkstock Before entering into a business relationship with a person or another company, conducting a background check is important.

Troublesome clients come in many forms, but the two most common problem clients are those who complain or cause problems and those who won’t pay. Sometimes these are the same people. One thing you might not be able to determine initially before entering into a relationship is how they are going to behave when things don’t quite go their way, or even when they do. But, you can get a feel for financial trustworthiness by doing a bit of a background check on a new client before devoting time, money and resources in administering your business services.

Credit or Down-payment Policy

Do you have a policy in place that requests payment up front or a certain amount of down payment for your services? Many businesses provide a 30-day courtesy window for a client to pay their account due; an offering of credit is typically, but not always, given to an established client. It is a privilege for someone to receive credit and it helps to know in advance if the client will honor this privilege and is able to pay on time. This is where a background check can come in handy.

Screening clients can be done through various channels. The first step is to gather standard information: name, address, phone, email, birth date, social security number, and at least one current credit card. When a new client asks to come on board, also ask them for references and the names of the last few places they used for boarding, training, breeding, and/or whatever service type you provide. A quick phone call to the references can help you find out if they were good or bad pay, or troublesome in other ways. If it is a new client who has never before had a horse or received comparable services, this won’t be a useful screening method, but you can ask for references from other areas in which they have been involved.

You can also Google a potential client’s name; this might yield information from press releases, media commentary, foreclosures, court records, etc. With common names, trying to locate that person via Google may be problematic if you don’t include a person’s middle name or initial. Similarly, if some event wasn’t recorded using the person’s middle initial, the Google search may not yield results. Other search databases that might provide further insights include Teoma, Yahoo, and Gigablast.

Dealing With an Individual Doing Business as a Company

If you are working with a client who registers himself or herself as a “company,” for example Jane Doe doing business as Horse Heaven Farm, it helps to ensure that the company is registered with your state’s Secretary of State and that the principal persons doing business on behalf of the company are named specifically in the company’s filing with the Secretary of State. As a principal of the company, an individual can represent their company with legal authority to enter into a financial transaction with you. The Secretary of State website is accessible to everyone and provides this kind of information at no charge. Even if the horse farm is not incorporated or a LLC, there should be comparable information for sole proprietorships.

Financial History of a Client or Business

You can further obtain financial history information about a potential client by accessing credit reporting companies such as Equifax, Experion or TransUnion. A credit-reporting company provides a track record of a client’s financial transactions and payment history to lenders that have extended credit to the individual. With your client’s consent (and having them pay the $14.95 fee), Experion Connect enables you to access a client’s credit report directly from the credit bureau.

TransUnion’s TLOxp (http://www.merlindata.com) is another resource that identifies business risk, collections history, authenticates identities, and performs other components of background checks. Just by entering a name, address, email address, and/or social security number, TLOxp begins the search through a repository of public and proprietary data.

Corporate credit and information bureaus like Dunn & Bradstreet (DnB, www.dnb.com) or Cortera (www.cortera.com) also provide listings of companies, especially those that pay to be listed. As an example, DnB checks the legitimacy of a company against government records as well as providing metrics for risk and financial stability.

There are also consolidated information sources (www.knowx.com) that provide information about a company for a nominal fee. The KnowX website reports: “Protect yourself. Choose vendors, service providers, and business partners without the worry of unknown, troublesome histories. Uncover bankruptcies, judgments, lawsuits, liens, FEIN, corporate records, and business address and phone information.”

If you are neck deep in tending to your business, then pursuing background checks through Internet searches may be more time consuming than you can afford. Locating individual clients who are not representing a “company” can be a bit tricky. Google has a system called Google Alerts that monitors names and keywords you put into it--any up-to-date information about a client will be emailed to you through Google Alerts.

Another route to take if you don’t have the time to pursue an exhaustive background check is to hire an outside consulting firm that specializes in background checks.

Permission and Policy

In any case, it is always a good idea to obtain consent from a potential or current client to allow you to look into their credit scoring; this enables you to build a trustworthy and transparent relationship from the start rather than trying to sneak around behind their back. If they are truly responsible and have good intentions, then they will willingly provide you with necessary information to confirm their ability to pay.

Alternatively, your business policy might require payment in advance of providing a service--this guarantees good faith by the client and avoids conflict. Be aware that when accepting checks, there may be as much as a 2-3 week time lag until your bank returns a check for non-sufficient funds, which by then is far past the time services were provided. If you have suspicions of a potential problem, it is best to accept cash, a cashier’s check, money order, or credit card. The ability to accept credit cards enables you to receive immediate confirmation from the merchant processing provider that a credit card payment is accepted and funds delivered to you.

The Bottom Line

The bottom line in any business is to have cash flow for your efforts and investments. With this in mind, it is good to cover your bases in ensuring continuous payment for services by pursuing a little investigation before entering into a business relationship with a new client. By following a few fundamental strategies, you will maximize your cash flow rather than being frustrated and further financially penalized by having to send non-paying clients to collections.