Due Diligence as the Tool for the Reliability of the Counterparty

Abstract

Doing business involves entering into contractual relations not only with the clients, whose business reputation and financial capabilities have been tested for years, but also with the suppliers, vendors and lessors. Quite frequently there are lucrative offers from previously unknown companies, or sometimes there might be a need for transactions of purchase and sale of real estate, stocks or other assets on the open market, the suppliers and contractors often get changed. In order to form the most complete picture of partners and contractors from the point of view of the financial reliability aspect as well as the assessment of the prospects for further cooperation, the due diligence procedure is organized.

The relevance of the researched theme will provide an opportunity to protect the organization from fraud on the part of the partners and contractors, which will contribute not only to the reduction of the financial risks of the company, but also to the increase in economic security of the organization as a whole.

The authors have covered the acute aspects of the organizational process of due diligence in various economic entities. The methods of the research were as follows: the method of analogies, grouping method, analysis, synthesis, comparison, systematic and logical approaches. The sources of information were: the legal framework and the annual reports of the international companies.