Pre Sales Market Research- Active/Dormant status of a Company for framing Debt Recovery policies

Active-Dormant-status-of-a-Company-for framing-Debt-Recovery-policies

Introduction

In the business sector presales have always played a significant role in determining the contingencies a business can face in the short and long run. Presales is a simple process of conducting a market research before making any sale. If presale research is authentic then it becomes easier for a business to take decisions based on that analysis of the research. With the help of one can also find out about the status of a Company whether it’s in Active or Dormant state. Often many fraudulent companies which are actually dormant in nature present themselves as actively running to deceive other companies and make money out of it. To prevent your business from such frauds and bad debts, it is vital to have debt recovery policies.

In this article we will discuss about the status of a company and how it can influence in framing debt recovery policies.

What is Active/Dormant status of a Company?

Active Company– Out of nearly 15 lacs companies in India, around 10.5 lacs are Active companies. An ‘Active’ means it is operating and is regular in filling its Balance sheets, Profit & Loss Statements, Annual Returns and other statutory documents. When a company is incorporated, it is given the status of ‘Active’.

Dormant Company– There are around 1.4 lac dormant companies in India. A Dormant company is an inactive company which has not been carrying any business or has not made any significant accounting transaction in the last two years.

However, it is not always that dormant companies mean that they are defunct. A company could be dormant because it wants to hold an asset for future and till then its wants to save its compliance cost. It can then become ‘Active’ later by making an application to the Registrar of Companies, when it deems fit.

What are the methods to find out the Active/Dormant status of a Company?

To find out the status of the target company, one can adopt the following methods mentioned below:

  • For authentic information cross check from MCA’s website.
  • Visit data.gov.in to fetch information about the existence of the company.
  • Visit the Income Tax Website to fetch the annual income tax filings.

Why is it important in framing Debt Recovery policies?

A company which is in active state and maintains a sound financial statement is less likely to make a default in payment. But there are a lot of fraudulent companies out there whose primary intention is to make money fraudulently and hence they tend to default in payment. It is from such fraudulent companies one needs to be aware of and frame robust policies of debt recovery and other aspects of the business. It is important to know that the company with which we are about to deal is existing and functioning in a sound active state.

Conclusion

We have tried to discuss here about the sound financial state of a company and establish a relation with debt recovery policies. Presales have proved to be a vital element in the business sector, based on presale research businesses have taken very important decisions to run their company. Sometimes it has created miracles and sometimes it could not. But it is no harm to be vigilant about your customer; beforehand knowledge acts a preventive measure hence safeguarding your business from bad debts and contingencies.

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