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Director Due Diligence

Get to know a director’s past and present activity to mitigate risk to your business

Why is Director Due Diligence Important?

When it comes to mitigating risk to your business, performing due diligence on the director should be a vital step. Past and present director behaviour is a great indicator of the future of a business. Here are a few things to consider:

  • A director with a payment default is 5 times more likely to experience another one
  • A director with a court action is 2 times as likely to have another one
  • A director with a failed business is 2 times more likely to fail again

Aside from the statistics above, there are other points to consider. If one of the worse case scenarios occurs and a director becomes individually bankrupt, they can slip through the cracks and still operate even though it is illegal to do so. This can often be flagged with slight name and address changes.

If there have been insolvencies and the director sets up other companies afterwards with slight changes, this could also be an indication of illegal phoenix activity. Illegal phoenix activity is the process in which a new company is created to continue the business of an existing company that has been deliberately liquidated to avoid paying outstanding debts- including taxes, creditors and employee entitlements.

Adverse director information can be flagged with our Director Due Diligence feature. This feature will identify is a director is bankrupt or if there are any adverse cross directorships.



Bankruptcy Search

Historically bankruptcy searches have been expensive and often not performed due to the expense of each search. Our Bankruptcy search will assist you to look closer at the individuals behind a business. It proactively flags possible bankruptcies and allows you to perform searches across multiple individuals.

With the support of Australian Financial Security Authority (ASFA), historical bankruptcy data allows for additional alerts and monitoring within your CreditorWatch account, updated hourly and aids bankruptcy searches. Search director names, date of birth or location to enhance your credit risk assessment and proactively flag possible bankruptcies and reduce the costs of NPII Reports.



What are Adverse Cross Directorships?

A cross directorship is the term used to define when the director of one company is also the director of another company or companies. Often, creditors are unaware that the director of a company who they are doing business with, is also the director of one or multiple companies elsewhere.

Some cross directorships can pose a risk to your business. When the director of a company you are monitoring has an adverse action registered against another one of their companies, this can indicate you may eventually feel the effects of that action.



How does CreditorWatch’s Adverse Cross Directorships feature work?

When the director of a company you are monitoring has an adverse action registered against another one of their companies, you will receive an email alert. Changes include court actions, payment defaults, insolvency notices, mercantile enquiries and status changes. Download the infographic.

The Benefits of Director Due Diligence

  • Identify bankrupt, or previously bankrupt, individuals
  • High match algorithms to identify variations in names, addresses and date of birth
  • Seamless integration into existing commercial credit reports
  • Run reports on directors, sole traders, partners or guarantors
  • Identify cross directorships
  • Receive alerts when the company you are monitoring has an adverse change

Director Due Diligence Webinar


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