How to check a company's reliability: suppliers, customers and partners before you sign.

A foreign supplier you have never heard of offers the same goods at a price 20% lower, but asks for a 50% advance. A new customer who, on their very first order, wants a large supply on ninety-day payment terms. A businessman who proposes to come into your S.r.l. (Italian limited company) as a partner, bringing “capital and contacts”. A subcontractor who turns up with an unbeatable quote for a building site that is already behind schedule. In every one of these cases the question is the same: how do you check whether a company is reliable before you sign?

The answer starts with public tools that anyone can consult and, when the stakes are high, leads to an investigative due diligence. This guide explains which checks you can carry out yourself, which warning signs not to underestimate, how to recognise a shell company used for fake invoicing (società cartiera) or a “fly-by-night” company, and when it makes sense to entrust the check to an authorised investigation agency.

Why check a counterparty before the contract

A preventive check costs little compared with the damage it avoids. The most frequent risks we see among companies in North Milan are four:

• Bad debts: the customer who orders, collects the goods and does not pay, often because they were already in difficulty when the order was placed.
• Fraud: the fake supplier who pockets the advance and disappears, the company set up specifically to run up debts and close down, the fraudster who poses as a real business by copying its name, website and logo.
• Joint and several liability: in contracting, the client is jointly and severally liable with the contractor, for up to two years after the end of the contract, for the wages and social security contributions owed to the workers employed (art. 29, paragraph 2, D.Lgs. 276/2003). Choosing an unreliable contractor can mean paying twice.
• Reputational and compliance risk: for companies with an organisational model under D.Lgs. 231/2001, partner selection is a crime-prevention safeguard, not a formality.

The checks you can carry out yourself

Much of the information on the reliability of an Italian company is public and can be obtained in a few minutes, free of charge or at a modest cost. Here is where to start:

• Visura camerale (company register extract) from the Registro delle Imprese: date of incorporation, registered office, share capital, corporate purpose, directors, shareholders (for S.r.l. companies), status of the business and any proceedings under way. It is the starting document for any check.
• Filed financial statements: for limited companies they can be obtained from the Chamber of Commerce. Turnover, net equity and debt say a great deal; financial statements that have not been filed for years say even more.
• Electronic register of protests (registro informatico dei protesti), kept by the Chambers of Commerce (L. 235/2000): protested bills of exchange and cheques remain visible for five years.
• Insolvency proceedings: judicial liquidation (formerly bankruptcy, now governed by the Business Crisis Code, D.Lgs. 14/2019), composition arrangements and liquidations appear in the company register extract.
• EU VAT number: for EU counterparties, the European Commission’s VIES system confirms whether the number is valid for intra-Community transactions.
• Anti-mafia white list: for high-risk sectors (transport, earthmoving, waste disposal, plant hire with operator and others) the Prefectures publish the list of companies not exposed to attempted mafia infiltration (L. 190/2012).
• Documents to request from the counterparty: the DURC (certificate of social security compliance), references from verifiable customers, the certifications claimed (which must then be checked on the website of the body that issued them).
• Online presence: website, domain registration date, reviews, press coverage, images of the premises on maps. A website created three weeks ago for a company that claims twenty years of history is an inconsistency worth looking into.

For foreign counterparties, the local equivalents of the company register apply and, always, a check against international sanctions lists (the European Union’s Sanctions Map can be consulted online).

The warning signs not to ignore

No single indicator proves fraud on its own, but some patterns recur with regularity. A counterparty deserves a closer look if it presents:

• a company set up only a few months ago, with minimum capital, that offers or requests volumes out of proportion to its history;
• frequent changes of registered office, name, corporate purpose or director, especially in quick succession;
• a director with many positions in companies that have ceased trading, are in liquidation or have ended up in insolvency proceedings, or with no recognisable professional profile (the classic front man);
• a registered office at a business address provider, with no operating site, warehouse or staff matching the declared activity;
• unfiled financial statements, negative net equity, protests or adverse registrations;
• payment requests to foreign bank details or to details held in the name of someone other than the company, or a change of bank details communicated only by email: this is the typical pattern of fake supplier fraud, and it should always be verified with a phone call to a number you already know;
• prices well below market combined with strong pressure to close the deal.

If the first contact happened online, many of the dynamics match those we describe in our guide on online scams and how to act to recover your money.

Fake-invoicing shell companies and “fly-by-night” firms: how to recognise them

A shell company used for fake invoicing (società cartiera) exists only on paper: it has no real structure and serves to issue invoices for non-existent transactions (art. 8 D.Lgs. 74/2000), often within carousel VAT frauds. “Fly-by-night” companies (apri e chiudi), on the other hand, genuinely trade for a few months, run up debts with suppliers and the tax authorities, and are then abandoned or transferred to a front man before creditors manage to act.

The risk for those who do business with them is not only financial. A buyer who purchases from a fake-invoicing company may have its VAT deduction challenged if, according to case law, it knew or should have known, by exercising ordinary diligence, that it was taking part in a fraudulent transaction. Having carried out and documented preventive checks on the counterparty is therefore also a defensive safeguard.

The typical clues: registered office at a business address provider or a residential address, no employees or vehicles, a front-man director, a recently started business with suddenly high turnover, a generic, all-encompassing corporate purpose, a sparse or missing website.

When an investigative due diligence is needed

Public registers describe a company’s formal situation. They do not tell you whether someone else stands behind the director, whether the premises are really operational, whether the declared references exist or whether the shareholders have already left a trail of failed companies behind them. When the contract is significant (a strategic supply, a works contract, the entry of a partner, a transfer of shares) it is worth entrusting the check to professionals. An investigative due diligence carried out by an authorised agency normally includes:

• the reconstruction of the corporate network: current and past positions of shareholders and directors, shareholdings, related companies and what became of them over time, from the company registers;
• land registry, mortgage register and PRA checks (PRA: the Italian public vehicle register) on the assets held, to understand whether there are assets that could be enforced against in the event of default, in continuity with our asset investigations;
• OSINT analysis of the press, published rulings, known litigation, digital presence and reputation in the sector, including on key people through a dedicated reputational analysis;
• on-the-ground verification: inspection of the premises, verification of operations, staff and vehicles, checking of the declared business references;
• for foreign counterparties, examination of the registers of the country concerned and of sanctions lists.

A word of honesty: third parties’ banking relationships and tax data are not accessible to a private investigator. Be wary of anyone who promises them. If the counterparty becomes a debtor, it is the information gathered lawfully that will enable the lawyer to file a targeted application for an electronic asset search under art. 492-bis c.p.c., as we explain in our guide on asset investigations for debt recovery.

What the final report contains

The result is a written report that sets out the verified facts in order, states the source of each one and distinguishes what is proven from what is only an indication. In this way the owner, purchasing department, legal department or advisor can make an informed decision: go ahead, ask for guarantees (advance payment, surety, termination clauses), renegotiate the terms or walk away. Personal data of directors and shareholders are processed in compliance with Regolamento UE 2016/679 (GDPR), on the basis of the client’s legitimate interest in assessing contractual risk.

For companies with a 231 model or an internal reporting system, partner screening fits in with our 231 investigations and whistleblowing management.

Frequently asked questions on checking a company

How can I check for free whether a company is reliable?

By starting from public data: the company register extract (some basic information can be consulted free of charge, the full extract has a modest cost), the validity of the VAT number on VIES for EU companies, press coverage and online reviews, the website’s registration date. Financial statements and protests can be obtained from the Chambers of Commerce for a small fee.

How can I tell whether a supplier is a scam?

Check that the company exists in the company register with the same details shown on its website, emails and invoices; that the payment details are in the company’s own name; that the website was not registered recently; that the references are real and reachable. A request for a large advance combined with off-market prices and strong urgency is the most recurrent warning sign.

Can a foreign company be checked?

Yes. Almost every country has a company register that can be consulted, often online. On top of this come the VIES check for EU companies, international sanctions lists and, in the most sensitive cases, on-site verification through local correspondents.

How long does a due diligence on a supplier take?

It depends on the depth required: a documentary and OSINT check on an Italian company generally takes a few working days, while groups with several companies, foreign counterparties or site inspections take longer. For an idea of costs, you will find the criteria on our page on how much a private investigator costs.

Checking suppliers, customers and partners in Milan and Lombardy

Arcadia Company operates from its office in Sesto San Giovanni for businesses, law firms and professionals in Milan, North Milan and throughout Lombardy, with an ISO 9001 certified method and staff authorised under art. 134 TULPS. Before signing an important contract, find out how we work in our corporate investigative due diligence, or contact us for an initial confidential assessment of the counterparty.