Credit Checks

[Safe Collections]

1 - Who here credit checks their pimps?

2 - I've been offered a new contract with Lockheed Martin via an agency, I credit checked them earlier (we use CreditSafeUK) and it's come back as "17 - Cash Transactions" because it's that low.

So I went down the route of getting a Director of the agency to sign a Directors Guarantee and completing a Credit Application document - which went down like a lead balloon but I hit a nerve when I sent the screenshot of the credit rating to the director and two their staff.

The agency have now put a clause in the contract saying that if the agency cannot pay, then the parent company will do (they have a better credit rating thank god).

How would I legally stand if they couldnt pay the invoice, bearing in mind the agency director isnt a director of the parent company.
Has anybody else had something similar?

TL;RD
1 - Do you credit check your pimps?

2 - Agency have a tulip credit rating, I try to get agency director to sign a Directors Guarantee and Credit Application form. Agency Director isnt happy and changes contract so that if the agency cant pay our invoices their parent company will.

Thanks
GE

First of all, have you sourced more than one credit report? If not, you might want to check out DueDil for a free second opinion... Credit Reference Agencies aren't infallible and it could be an error with the data.

If that report matches the first then you have done exactly the right thing in seeking a personal guarantee, however contrary to popular opinion it isn't as simple as getting the director to sign a piece of paper. In our opinion to be enforceable a PG needs to be drawn up properly by a solicitor and introduced to the contractual negotiations in the correct way. We have seen numerous clients over the last 30 years fall flat when seeking to enforce poorly drafted PGs.

If the parent company is in a better financial position then a commitment from the parent to pay you in the event the subsidiary goes bust is probably the best option. But as stated above by TheFaQQer whoever signs the contract does need the correct legal authority to bind the parent company contractually. This is crucial if you seek to rely on the agreement in the event the subsidiary can not pay.

A letter from the parent company confirming that X person at the subsidiary holds legal authority to agree a contract should suffice in this instance, provided it clearly displays the correct name and legal information of the parent company.

If you aren't already an IPSE+ member you would be covered by the insurance provided you become a member before agreeing the contract as the cover provided is not retrospective. However the cover is capped at £7.5K per agency.

In an ideal world, the best way to proceed would be to secure a contract direct with the parent company but if that isn't possible then a guarantee from the parent co would certainly help in the event of non-payment.

Oh and one final thought, the parent co is a UK based company yes?

[TheFaQQer]

If you aren't already an IPSE+ member you would be covered by the insurance provided you become a member before agreeing the contract as the cover provided is not retrospective. However the cover is capped at £7.5K per agency.

No it isn't.

It's capped at £10k per individual, £100k per agency and £500k for the whole scheme.

So get in early in the year, and early in the process

[garethevans1986]

Safe Collections - thank you.

We use CreditSafeUK for our credit ratings.

DueDil also show the same credit rating so I dont think it's the data.

Ill let you know how I get on.