Before You Sign: 7 Red Flags That Mean You Should Vet a Business Partner

1. The company name changes between the pitch, contract and invoice

You meet one brand, receive a contract from another company and are asked to pay a third. Group structures and trading names can explain this, but the relationship should be clear before money changes hands. An unexplained mismatch leaves you unsure which entity owes you the work and which one you could pursue if the deal fails.

Ask for the contracting entity’s full legal name, registration number, registered address and country of registration. For a Czech business, use its IČO to check ARES, then examine the relevant public register. Compare the details with the contract and invoice. For a foreign entity, use the official register in its home jurisdiction rather than assuming a Czech search covers it.

Before signing: ask for a written explanation of every different entity and its role. Do not accept a logo or website footer as proof of the contracting party’s identity.

2. A substantial business has very little traceable substance

A company promises experienced staff, established operations and major delivery capacity, yet offers no verifiable evidence of any of them. Its address is shared by many businesses, its directors have recently changed, and nobody can explain who actually controls the operation. Taken together, those gaps deserve attention.

A holding company, a new business or a company using a registered office service is not inherently dishonest. A shell company is not automatically unlawful either. The issue is whether the structure and available resources make sense for this particular deal. Ask how the work will be delivered, who will perform it and which entity holds the relevant assets or contracts. Compare the answers with register entries and documents in the collection of deeds. Ownership information may be incomplete or subject to access restrictions; a gap is a question to resolve, not proof of concealed wrongdoing.

Before signing: request evidence proportionate to the commitment, such as a verifiable operating address, named delivery contacts and an explanation of ownership and group relationships.

3. Insolvency records or missing financial information contradict the sales story

The sales team describes a financially secure business, but public filings tell a less reassuring story. There may be an insolvency proceeding, repeated changes of entity, overdue accounts where filing is required, or figures that do not support the scale of the proposed work.

Search the Czech insolvency register using the exact entity and IČO. Read the procedural status and the court documents rather than stopping at a search result. An insolvency petition is not the same as a court finding of insolvency, and an older proceeding may have ended. Where accounts are available, check the accounting period, filing date and context. Missing documents alone do not prove fraud or insolvency.

Equally, no entry in the insolvency register is not a clean bill of financial health. It will not tell you every unpaid invoice or whether the business has enough cash to complete your project. For a material commitment, ask your accountant or adviser to assess the available financial information and proposed payment terms.

Before signing: resolve material inconsistencies in writing and consider whether staged payments or other protections are appropriate with your advisers.

4. Their strongest references cannot be independently confirmed

Impressive client logos and glowing testimonials are easy to display. They become useful evidence only when you can establish what work was done, for whom, and by which company. A reference who can only be reached through a mobile number supplied by the partner is not an independent check.

With appropriate permission, contact the reference through a channel you locate yourself, such as the client’s published switchboard or official website. Ask about the nature and timing of the engagement, delivery and how problems were handled. Check whether the referee is describing the contracting entity, a director’s former employer or an unrelated company with a similar name.

Some clients cannot discuss confidential work. That is not automatically suspicious. The warning sign is an inability to provide any suitable alternative, or repeated resistance to ordinary verification while relying heavily on those references to win your trust.

Before signing: independently verify the references that matter to your decision. Treat screenshots and forwarded praise as leads, not confirmation.

5. Their online reputation does not fit their claimed history

A business claims a decade of prominent projects, but its website, staff profiles and publicly visible activity provide little support. Reviews appear in a short burst, profiles repeat identical wording, or the only coverage comes from pages controlled by the business itself.

Search the legal name, trading names, relevant individuals and registration number. Where appropriate, search in Czech and in the languages of the markets involved. Compare independent coverage with the company’s account of its history. Website archives and domain information can provide context, but a recent website does not prove the company is new, and private domain registration is common.

Small businesses, confidential suppliers and new ventures may have a limited online presence. Negative posts can also be mistaken, malicious or about someone else. Record the source and date of anything material, verify identity carefully, and give the business an opportunity to explain. The concern is a significant contradiction, not the absence of a busy social media feed.

Before signing: ask for evidence behind important claims that the public record does not support. Do not turn an unverified review into a factual allegation.

6. Payment instructions bypass the company you are hiring

An unexplained personal account, a different account holder or a last minute request to send funds elsewhere should interrupt the payment process. These discrepancies may reflect legitimate arrangements, but they can also signal impersonation, a compromised email account or an attempt to move funds beyond the contracting entity.

Confirm the account holder and reason for any third party payment. Verify changed instructions through a previously established contact channel, not the telephone number in the message announcing the change. If EU VAT status matters, VIES can help validate a VAT number. It does not certify solvency, commercial reliability or ownership of a bank account.

Before paying: independently confirm any account change and resolve unexplained mismatches. A genuine deadline is no reason to skip that check.

7. They resist basic checks or rush you past signing authority

A reasonable request for company details produces irritation, evasive answers or a claim that the opportunity will disappear unless you sign immediately. Meanwhile, the person negotiating cannot clearly explain their authority to bind the business.

Check the public register for the relevant representatives and recorded method of acting on behalf of the company. Some arrangements require more than one signature. If a different person will sign, ask for evidence of their authority and have counsel assess it where needed. A senior sounding job title or company email address is not sufficient on its own.

Legitimate businesses can have urgent deadlines. What matters is whether they allow proportionate checks and answer specific questions consistently. If the potential partner insists that ordinary verification is disloyal or unnecessary, you have learned something important about how they may handle problems after the contract is signed.

Before signing: confirm authority and settle outstanding questions. Pause the commitment if a material identity, payment or authority issue remains unresolved.