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While companies large and small deal daily with all sorts of vendors, some actually take the time to investigate and get to know those companies they do business with. Many others fail to do so, transacting business with vendors they know little about. Unfortunately, doing so can place a company at tremendous risk.

Advent Computer Corp came upon an opportunity to work with a Georgia-based computer component wholesaler who could provide parts at a good discount to market. As such, Advent was seriously considering making a $250,000 bulk order of computer fan components, despite the fact they were unfamiliar with the wholesaler.

Although they were keen to proceed with the lucrative transaction, the fact the wholesaler required payment via wire transfer before shipping gave Advent pause – they felt they needed to protect themselves by learning more about the vendor before proceeding.

“When we first heard about the opportunity to buy the fan components at a pretty decent discount we were interested, but certainly not alarmed. These kind of situations happen with frequency in our business and we’ve taken advantage of such opportunities in the past with vendors we were familiar with,” says Gary Moore, executive V.P. “The fact we didn’t know the company, coupled with the payment terms in advance, did make us cautious. We decided we needed to protect ourselves and find out more about the wholesaler before spending a quarter-million dollars with a group we didn’t know.”

Challenge

The company needed to learn more about the wholesaler, but lacked the expertise or resources to conduct an investigation on their own. Additionally, they were time constrained and didn’t want to see the opportunity pass on to a competitor.  They weren’t sure where to turn at that point, according to Moore. “We had never faced a situation quite like this and basically had no idea how to go about investigating a vendor,” he notes. “We even discussed dropping the entire matter, but frankly the opportunity was potentially too lucrative to simply walk away without some attempt on our part.”

Although they were unsure what areas they would need to delve into, Advent determined they would need to quickly identify and enlist the services of an investigative firm to assist them in gaining a fuller picture of the Georgia-based wholesaler before they could prudently move forward with any type of transaction.

Solution

Advent conducted an Internet search that ranged from law firms and private investigators to automated research companies that claimed to be able to run quick, inexpensive background checks on businesses and individuals.

The company became aware of PBAcheck and liked the fact that they were an attorney-owned investigative research company, so they made contact. “Although cost was a factor, the cheap automated search companies didn’t appeal to us – we doubted the value of anything they were capable of providing,” states Moore. “While they were more expensive, PBA was much more appealing. They offered a wide array of options and packages and their reports seemed more thorough and inclusive. And the fact they were attorney-owned provided us with added confidence.”

PBAcheck worked with Advent to determine which types of investigative searches would best satisfy their needs in a short time frame. Utilizing some of its proprietary sources and databases, the investigation was quickly completed and PBA was able to issue a comprehensive business report in a short period of time.

The report demonstrated that the wholesaler was owned by individuals that were currently under investigation by the U.S. Attorney’s Office for conducting two different “bust-out” schemes in which they sold inventory fraudulently obtained (purchased from suppliers but never paid for) to unsuspecting companies. Additionally, the PBA report revealed a recently filed civil lawsuit against the wholesaler for non-delivery of $180,000 worth of pre-paid product, as well as a separate unrelated complaint to postal authorities for non-delivery of goods.

Results

Based on the information uncovered in the PBAcheck investigation and comprehensive report, Advent decided to forgo the opportunity to purchase the discounted computer fan components. They determined that there was a high probability of non-delivery, given they would be paying for the inventory in advance. Additionally, the company recognized there was a good chance the parts were obtained fraudulently, so purchasing the components could actually drag them into legal jeopardy.

“It’s easy to learn a lesson in hindsight, but that can be a painful experience. Thankfully we were able to avoid that. PBAcheck enabled us to quickly and easily order the set of reports we needed before making our final decision,” says Moore. “The PBA report more than paid for itself by warning us of the very real potential for non-delivery, thus preventing a significant loss. We plan to continue using PBAcheck in the future – we’ve learned that it pays to know the vendors you do business with.”