If your business relies on providing loan or investing in assets, you know how important it is to make the right choices. The wrong choice can be disastrous for the business, and for you personally. While most businesses that are already established will have checks and balances in place already, start-ups may not be at that stage yet. If you are looking at entering a business with this kind of model, it is worth having some idea of what you are looking for before committing to an investment. Here is a handy checklist to help you ensure your investments are secure.
- Have you checked credit history?
- Have you researched the asset’s status?
- Do you know what you are getting from the arrangement?
- Are you working through reputable agents and service providers?
If you are planning on lending money to an individual or business, a credit history check is a basic part of this process. This is how you will know if the applicant has any unpaid debt, previous bankruptcies or previous applications for credit which were rejected. Depending on your model, you will most likely place your own importance on each of these points – just make sure you are considering each applicant carefully and being consistent in your choices.
If you’re looking to purchase an asset, it’s important to know if that asset has been used to secure someone else’s debt. If that is the case, you could be in for trouble down the track. Luckily, this is easy to determine – the Personal Properties Securities Register exists for just this purpose, and companies like GlobalX Legal Solutions offer specialist search and management software that will let your business use the PPSR quickly and easily (you can find more information on this here). Registering your own assets before selling can also help protect your rights if the customer defaults or is insolvent, so this is a handy tool for businesses on either side of the fence.
The obvious answer here is ‘money’. You wouldn’t even consider it otherwise. But the real question comes down to margins and effort. If an investment is only likely to make a small profit, will it be worth the resources you invest to manage it?
If you are using a broker or any other sort of financial advisor or manager, how did you find them? Did you do your research on their background first? The relationship with financial advisor will have to be one of absolute trust, so it’s worth the time and effort it takes to find someone who is qualified, experienced and understands yours business and industry. This is one of those services where you get what you pay for, so be prepared for your ideal agent to be expensive. Think of it as an investment though – if they really are any good, they will be able to manage your money and investments in such a way that more than covers any ‘extra’ costs.
Good business decisions are all about knowledge, so arm yourself with the most relevant and recent facts available. Do you have anything to add to this list?
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