What Organisations Actually Look For When De-Risking UK Customers and Suppliers
Contents
Written by
Mike Newman
The practical reality of de-risking in 2026
Across credit, finance, and procurement teams in the UK, one question comes up again and again: what does good really look like when it comes to de-risking customers and suppliers?
From multinationals to regional wholesalers, I’ve heard this concern in dozens of conversations. A credit manager at a logistics firm told me their process involves credit reports and trade references, but they still feel unsure if they’re truly covered. Another procurement lead described how a seemingly stable supplier folded overnight, despite having a decent credit score.
These aren’t isolated stories. They highlight a pattern.
Companies know they need to manage financial risk in their networks, but many lack a clear picture of how to do that well in today’s environment.
Customers and suppliers: Different risks, shared pressures
Organisations typically separate risk strategies by counterparty type: customers versus suppliers. And rightly so – the risks, expectations, and consequences in each case can be very different.
Financial exposure: How to think about customers
When assessing customers, the primary concern is financial exposure. Will the customer pay on time? Are they solvent? How likely are they to collapse mid-contract, leaving you with bad debt? Finance teams typically begin with a credit score or credit rating – a shorthand indicator of risk. But stronger teams don’t stop there. They review filed accounts to understand turnover, profitability, and cash flow. They also consider payment history, especially if they have trading experience with that customer or access to trade reference data.
Legitimacy checks are equally important. It’s about making sure the customer is a real business, not a shell company or a vehicle for fraud. This often involves checking Companies House, confirming incorporation status, verifying directors, and comparing the registered address to the trading address.
In some cases – especially when onboarding new or small customers – teams go further, conducting director background checks or identifying beneficial owners to spot any patterns of previous failures or disqualifications. These steps help prevent you from entering relationships where risk is disguised behind polished paperwork. On the Company Watch platform, all this information is neatly packaged and available to access instantly.
Operational disruption and compliance: How to think about suppliers
When assessing suppliers, the focus is broader and often more strategic. Financial stability still matters – a failing supplier can disrupt your operations or derail project timelines. But operational resilience, continuity, and compliance risk often dominate the conversation. Questions like: Is this supplier mission-critical? Are they the sole source of a key component or service? Do we have a fallback option? These determine the real-world impact of a supplier failure.
To address these risks, leading organisations increasingly run deeper checks. That includes analysing the supplier’s balance sheet strength and profitability trends, but also scanning for signs of trouble in the news cycle, regulatory databases, or sanctions lists. ESG considerations are on the rise too: teams look for red flags around unethical practices, environmental breaches, or labour violations. Why? Because a scandal involving your supplier can quickly become a scandal involving you.
In high-profile sectors – like retail, food, or pharmaceuticals – many companies now run basic media scans as a standard step before onboarding. A single headline about supplier fraud or malpractice can damage years of brand equity. More sophisticated teams also track suppliers’ country risk exposure, especially if operations are concentrated in politically unstable regions. Others check for supplier certifications, safety records, or past performance on public contracts.
The bottom line?
While customers represent financial risk to your income, suppliers introduce operational, reputational, and sometimes even regulatory risk. Robust de-risking means tailoring your approach to the nature of the relationship, and treating both groups as potential sources of disruption if left unchecked.
What ‘good’ looks like in 2026
Best practice in de-risking today is layered and proactive. Here’s what I see leading organisations actually doing:
Verify the basics
Start with a solid corporate foundation. On the Company Watch platform, check whether the entity is active, whether accounts are filed, whether director names make sense, and whether the registered address aligns with what your contact has provided.
Run the numbers
Pull scores, limits, and alerts, then go deeper. What do the financials show? Is the business profitable? Is cash flow positive? Are they carrying significant debt? Trends matter. A three-year decline in revenue or margins is a red flag, even if the most recent year looks fine.
Check the directors
Are the people behind the business credible? Have they been involved in failed companies before? Public records can reveal disqualifications or patterns of dissolved entities. A supplier might pass a scorecard but still fail a credibility test.
Scan for legal or compliance red flags
Look for issues such as winding-up petitions, missing filings, or adverse regulatory history. One major firm I know automatically flags any counterparty with unresolved petitions or gaps in statutory reporting. It’s a relatively simple step that avoids major headaches down the line.
Build monitoring in
Don’t stop at onboarding. Many organisations now use automated alerts to flag changes in credit scores, director appointments, or new legal filings. A quarterly or biannual refresh on key relationships is increasingly becoming the norm.
What’s helpful is that the Company Watch platform covers many of the core financial, corporate, and director-level checks in one place. This reduces the need to manually dig through filings or cross-reference multiple registries, allowing teams to focus their time on judgement and decision-making rather than data gathering.
Common missteps and blind spots
In my experience, a few patterns come up often when things go wrong, and it’s important for me to flag these to you in advance:
Over-trusting big names
Carillion taught us that size doesn’t equal safety. Even large firms can fail, and when they do, the damage spreads wide.
Relying on one metric
A good credit score isn’t a guarantee. Nor is a trade credit insurance approval. These are inputs, not conclusions. My suggestion is always to stop assuming anything based on the headline number.
Ignoring network effects
Risk doesn’t sit in silos. A weak link in your supplier’s supply chain can impact you. Some firms are starting to map critical dependencies or ask suppliers about their own exposure. It’s early-stage, but growing.
What this looks like in practice
Leading organisations group suppliers by criticality. For those that are deemed essential to operations – say, providing key inputs or services – they apply deeper scrutiny. That means starting with a full financial assessment: looking at liquidity, debt levels, profitability trends, and director background. Legal risks are part of the picture too, including checks for any outstanding petitions or regulatory red flags. Just as important is understanding operational dependency. If this supplier were to go offline tomorrow, what would the impact be? Is there a viable backup, or would the business face serious disruption? These are the kinds of questions that help build a realistic picture of supplier risk exposure.
That’s the model: quick insight, early mitigation, proportionate action.
The most important question is: are you using tech that helps you truly know your suppliers?
Some closing thoughts
De-risking isn’t about paranoia or delay. It’s about clarity. The goal is to move fast when it’s safe, and pause when it’s not.
Done right, it builds trust. Customers and suppliers respect the process when it’s fair and transparent. Sharing your risk expectations early, explaining why certain checks matter – it sets the tone for a solid, long-term relationship. Equally, if you’re a supplier or a customer, knowing that your partners are approaching risk with clarity and consistency can actually deepen the relationship rather than strain it.
In 2026, “good” de-risking isn’t about having a perfect system. It’s about having a repeatable one. One that integrates financial data, compliance checks, human judgment, and real-time alerts. One that lives not in a siloed checklist, but in the day-to-day decisions your teams make.
That’s how organisations move from reactive to resilient. And in a volatile market, that shift can make all the difference.
Mike Newman
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