In today's world of globalization and rapidly changing business conditions, as well as under the occurrence of new markets and areas of international entrepreneurship, the Russian legal entities are increasingly entering into business relationships with foreign companies. To minimize risks and ensure the security of business, it is extremely important to conduct thorough check of potential international partners.

Entering into transaction with an unfair partner could cause serious risks for the external economic activity of one's company, creating losses and adversely affecting the company's reputation. This is especially undesirable in the frames of developing new international markets.

The principle of compliance with due diligence standards is firmly embedded in the corporate compliance policies of most Russian companies. However, on the background of the current geopolitical changes, when Russian companies are increasingly turning to new markets, including in the East, it is necessary to pay attention to other aspects of checking the counterparties in the frames of international business.

Conducting foreign economic activity under the conditions of global sanctions, commodity restrictions and the organization of parallel imports impose an additional burden on business. A thorough examination of international contracts, preparation of documents and reporting for currency control, as well as compliance with the requirements of the legislation of the Russian Federation, in particular No. 115-FZ, is required.

Let's examine the key aspects that should be taken into account when checking foreign companies:

The first step is to check the legal status of the foreign company. This includes finding out registration details such as official company name, principle address, registration number, date of establishment, etc. Checking this data will help ensure that the company operates in accordance with the laws of its country.

Assessing the financial condition of a foreign company plays an important role when deciding on cooperation. This includes analysis of financial, accounting, tax reports and other financial documents. This information allows to assess the stability and financial strength of a potential partner.

Researching the reputation and history of a foreign company is also important to assess its reliability and proper fulfillment of obligations. Checking for negative news, litigation, fines or other incidents will help identify potential risks.

Russian legal entities need to ensure that the foreign company complies with local laws and regulations. This includes verifying the availability of all necessary licenses, certificates and permits to operate the business.

Examination of the corporate structure and management system of a foreign company helps to understand its internal processes and decision-making mechanisms. It can also help to determine how transparent and effective internal management processes are.

Another important aspect of checking a foreign partner is the implementation of sanctions compliance procedures and checking the presence of the partner and related persons in negative registers.

Using the Sanctions Compliance module in the Information and Analytical system Globas you can check against all global lists of sanctions, restrictions, negative registers, including those imposed by Russia and the UN Security Council, which must be followed by all legal entities of the Russian Federation and lists which must be checked within the framework of 115-FZ Federal Law.

Thorough check helps reduce risks and ensure successful interaction with foreign partners. At the same time, it is important to use both own resources and the services of professional information agencies for checking companies in order to obtain all the necessary information and ensure the security of your business, as well as reduce time for checking the counterparty.

Credinform and its product Globas will help you solve the problems of due diligence when checking international business partners. Credinform is a leading provider of economic information on companies from around the world.

In Globas, you can obtain online information about companies from Belarus, Kazakhstan, Kyrgyzstan, Latvia, Moldova, Tajikistan, as well as generate report on 450 million companies from Europe, America, Africa and the Asia-Pacific region. The report will contain data on financial statements, history, shareholders and beneficial owners.

You can order an offline report for more detailed and comprehensive check of a foreign partner. Your request will be processed by a team of professional experts with extensive experience and specialization in this field. You will receive comprehensive information, including registration data, financial statements, ownership structure taking into account international connections, expert opinion, as well as verification of connections and affiliations with Russian companies.

Due to an extensive network of partners, Credinform provides information on legal entities and entrepreneurs around the world, including Europe, Asia, America, Africa and Australia. The reports are provided in Russian and contain only reliable information obtained from reliable sources. Their content complies with international standards, including information on registration, management, shareholders, types of activities, balance sheet, profit and loss account, as well as a comprehensive assessment of solvency. For each foreign company, the experts of the Credinform Information Department also conduct an additional search for connections with Russian business.

The cash flow statement (Form No. 4) is the main form of accounting reporting and a valuable source of information about the financial condition of the company: it shows the sources of cash receipts and expenditures. The report provides transparency and allows stakeholders to assess the financial position and cash flows of the enterprise.

In the financial statements, the cash flow statement is presented in a standardized Form under number 4 and is regulated by the Russian accounting standard. However, not all legal entities are obliged to file the report under the Form No. 4. Small and medium-sized enterprises using the simplified accounting form are exempted from the mandatory filing.

Cash flow statement is presented with three resulting sections:

The resulting lines display the cash flow balance for each activity - the difference between receipts and payments. The sum of all cash flows displays in the total line.

Analysis of the cash flow statement helps to monitor the financial condition of the business, avoid cash gaps, identify temporary loss of liquidity and determine the most successful business structure.

But still, the most significant section of the Form No. 4 for the most companies in the real sector is the Cash flow from operating activities. It shows the results for the company's main activity. With a deficit cash flow, the solvency for short-term obligations and the liquidity of the business decrease, and the capital turnover periods increase.

There are often cases when profit is recorded, but in the cash flow statement the figure for the cash balance is much lower. The main reason is accounts receivable - expected funds that can arrive at the company's current account in different periods. This is where the main paradox arises - there is profit, but no money.

Let's examine a case in which Company X may have problems with solvency for short-term liabilities.

February 1: Company X purchased goods and made an advance payment of 80% - 800,000 RUB. The remaining part was obliged to be paid on March 1.

February 15: Company X resold the goods with deferred payment until March 10 for the amount of 1,200,000 RUB.

As a result, Company X records an income of 1,200,000 RUB and profit of 200,000 RUB, but it will not be able to pay off accounts payable on March 1, since there is no real money, and it will only arrive in the current account on March 10. As a result, there is a temporary loss of solvency. Failure to pay for goods on time may result in fines, litigation and have a negative impact on business reputation.

Tools and functions of the Information and Analytical system Globas allows you to conduct an in-depth check of the financial condition of the counterparty, identify a temporary loss of solvency and conduct extensive analytics on all forms of accounting statements.

Globas has everything for a high-quality financial analysis of a counterparty. You can carry out the assessment yourself using various instruments - Vertical and horizontal analysis of financial statements, Cash flow statement, including those built by the indirect method, Ratios with dynamics of change and comparison with industry indicators. For a quick check, the functionality of automatic assessment of the organization is available: Analytical balance sheet and Globas indexes will always inform about the current state of the company.