Partner's Reliability Assessment: How and by Which Criteria to Evaluate a Future Counterparty?

Why It’s Necessary to Check Your Counterparty?

Partner’s reliability assessment is a crucial step in any business, including exporting goods and tender sales to foreign markets. Checking your counterparty is an important step in establishing business relationships and selecting a supplier or partner for your business. Here are several reasons why it’s important to check your counterparty:

• Ensuring Reliability: Assessing your counterparty helps ensure their reliability and professionalism. You want to collaborate with a supplier or partner who fulfills their obligations, adheres to agreements, and provides high-quality goods or services.
• Risk Reduction: Analyzing your counterparty helps identify potential risks and issues related to their financial position, reputation, and the quality of goods or services offered. This allows you to make informed decisions and minimize potential negative consequences for your business.
• Quality of Products or Services: Checking your counterparty allows you to evaluate the quality of their products or services. You want to ensure that the supplied goods or services meet your requirements and quality standards. This helps meet customer needs and maintain your brand reputation.
• Financial Stability: Analyzing the financial position of your counterparty allows you to assess their solvency and stability. You want to be confident that the counterparty has sufficient resources and the ability to fulfill their obligations under the contract.
• Compliance with Standards and Requirements: Checking your counterparty ensures compliance with legislation, quality standards, ethical standards, and requirements set by your industry. This is important for compliance with legal and ethical norms and preventing potential problems in the future.
• Establishing Long-Term Partnerships: Assessing your counterparty helps you choose a partner with whom you can develop long-term mutually beneficial relationships. You strive for a partnership based on mutual trust, support, and understanding. Analyzing your counterparty helps determine how well they align with your values and business goals and how likely cooperation will be successful and productive in the long term.
• Reputation Protection: Choosing an unsuitable counterparty can negatively impact your company’s reputation. Poor product quality, supply delays, or unethical behavior by the counterparty can cause customer dissatisfaction and damage your business image. Checking your counterparty helps avoid such situations and protects your company’s reputation.
• Legal Compliance: Analyzing your counterparty helps ensure compliance with legislation and regulatory requirements. This is important for preventing potential legal problems and penalties associated with violations of legislation, such as insufficient compliance with safety standards, labor, or environmental norms.

Partner’s reliability assessment allows you to establish the foundations of a reliable and mutually beneficial partnership, protect your business from risks and problems, and ensure the quality of products or services. It gives you confidence in choosing the right counterparty and contributes to the successful development of your business.

Checklist for Assessing a Future Counterparty: What to Pay Attention to?

Defining Requirements

• Determine your needs and requirements regarding the partner (openness to dialogue, timely payments, reasonable markups, compliance with agreements, etc.).
• Establish the main criteria to be used when analyzing your counterparty.

Reputation and Experience Check

• Research the partner’s reputation in the industry and among clients.
• Learn about their experience and examples of successful cooperation with other companies.
• Verify if they have certificates, licenses, or other documents confirming their production activities, qualifications, and the quality of their products or services.

Financial Stability

• Analyze the supplier’s financial indicators such as annual turnover, profitability, solvency.
• Check their financial stability and ability to fulfill long-term contracts.
• Find out if the partner has any issues with debts to suppliers or creditors.

Quality of Goods or Services

• Investigate the quality of the partner’s products or services.
• Assess whether their goods or services meet your requirements and quality standards.
• Check for certifications, warranties, and the possibility of quality audits.

Compare the Counterparty’s Prices with Market Standards and Competitors’ Prices

• Pay attention to price transparency and the possibility of price revision in the future.
• Check payment terms, deadlines, and payment methods, as well as the existence of penalties for delays or non-compliance with contract terms.

Quality Management System and Logistics

• Verify the efficiency of logistics processes and methods of shipment tracking.
• Find out how the partner responds to complaints and quality issues, as well as the measures taken to prevent them.

Social Responsibility and Ethical Principles

• Consider the partner’s policy regarding social responsibility, including labor rights, ethics, and environmental sustainability.
• Find out if the counterparty has certificates for participation in a social responsibility program.

Checking Counterparties in Government Procurement and Commercial Tenders

Analyzing the field of government procurement and commercial tenders is an extensive activity that includes researching the client’s sphere of activity, competitors, and more. General analytics can be conducted in various ways, such as through the internet. Closed methods can also be used, such as phone negotiations to obtain necessary data.

Checking counterparties in the field of government and commercial procurement is a valuable tool without which it is impossible to effectively participate in tenders and execute contracts. Without systematic analysis, it is impossible to assess risks, identify weaknesses, and it’s unclear how to outperform competitors.

Remember that the offerer is your future counterparty, so they also need to be carefully checked against various parameters.

• Extract from the Unified State Register of Legal Entities (EGRUL)

An organization may be in the liquidation, bankruptcy, or reorganization stage. Look at the “Information on Entries Made in the Unified State Register of Legal Entities.” This section displays all changes registered by the tax authorities. All of this can play a certain role in your victory and performance of obligations.

• Financial Solvency

Check at least 3 executed and paid contracts that were fulfilled in the last month. If not available, you can look at the previous month.

Visit the Unified Information System (UIS) website, go to the “Contracts and Agreements” tab, and open the “Registry of Contracts under Federal Law № 44-FZ” section.

• Debts and Lawsuits

Check the customer for the existence of court proceedings using the Arbitration Cases Database. Enter the name, TIN, or OGRN of the customer in the “Party to the Case” field.

Competitor Analysis

Decide what, where, and how you want to supply, how logistics will be structured, who has already supplied there, and whether there will be advantages in this niche.

Using specialized digital systems, you can determine which niche and which product are in high demand. Where there is high demand, you need to evaluate the number of offers.

Fierce competition does not mean you have no chances. Perhaps you will assess each competitor and determine that your offer will be the most profitable and suitable for the client. This will save money, shorten delivery times, and you will earn.

Process tenders systematically. For example, participating in competitions requires submitting a lot of information: about experience, qualifications, personnel, etc.

Imagine that you have studied many tenders with the same subject. You can identify competitors who also plan to participate in this tender. Then you can look at the tender result protocol, contract project, documentation. Look at all this information together, determine the criteria, look at the average score assigned to participants. After this, you will roughly understand what the competitor can submit in terms of qualification requirements. Thanks to this, you can get a higher score.

Offerer Analysis

Reliability: Finding an interesting tender is not enough. It’s also necessary to check the reliability of the offerer, study their arbitration history.

Selection Criteria: Determine the level of competition, average percentage of admission, and price reduction in the offerer’s contracts. Be prepared to quickly submit documents by gathering a document package in advance.

Relationship Analysis: Investigate the relationship between the offerer and the supplier. Review completed orders and identify purchases from a single supplier.

Look for offerers with high admission, low competition, and slight price reductions. Seek tenders with low competition. Consider the expected price reduction.

Conclusion

Supplier analysis is an important part of choosing a reliable counterparty. Consider the criteria and analysis methods mentioned above when selecting a supplier. Thorough supplier verification helps reduce risks, improve the quality of goods or services delivered, and establish long-term mutually beneficial partnerships.

If you encounter difficulties or don’t know where to start, you can always entrust this process to the team of professionals at Eurasia Gateway. You can familiarize yourself with our counterparty verification service. Trust your partner’s reliability assesment to Eurasia Gateway and make your business decisions with confidence. Feel free to reach out if you need further clarification or assistance!