Business partner check

What it means

Business partner vetting is checking a new company before starting to work together, especially before a first large order, an advance payment or supplying goods on credit. It relies on public registers and databases, most of which are freely available in Slovakia.

The starting point is the Commercial Register: whether the company exists, who its directors and shareholders are, where it is based and whether it is in liquidation or bankruptcy. Next come VAT registration and validity of the VAT number, the list of tax debtors, the tax reliability index and published financial statements.

The aim is protection against risks: a non-payer, a fraudster who vanishes after receiving goods, and also tax liability that can arise if a company buys from a supplier that did not pay the VAT and knew or could have known of the fraud.

How it works in practice

We recommend clients have a simple procedure applied to every new partner above a certain deal size. Register extracts are saved in the supplier file so that, in an audit, the company can show it acted with due care.

Warning signs include a company set up a few months ago with large turnover, frequent changes of director, a registered office at a virtual address with no real operations, unpublished financial statements, a low reliability index or a request to pay into an account not published with the VAT registration.

For customers, vetting helps set payment terms. For a new company with no track record, it is sensible to supply the first orders only against prepayment or on short terms, and to raise the credit limit gradually based on payment behaviour.

What to watch out for

Vetting is not a one-off. A company’s situation changes: it may go bankrupt, lose its VAT registration or change owners. For long-term partners, it is worth repeating the check regularly or using a service that flags changes.

For cross-border deals, public registers are supplemented by sanctions screening and verification of the VAT number in the EU system. A company dealing with a sanctioned person breaks the law regardless of whether it knew.