Verifying a business's Secretary of State registration is a crucial step for initial verification and Know Your Business (KYB) compliance checks. However, continuous monitoring of these registrations can provide valuable insights into the risk or stability of a business.
While Secretary of State records offer data points that show the filing history of a business, they often lack detailed descriptions of the events. Therefore, just relying on these fields is good but leaves something to be desired. Being aware of any changes over time and the details of those changes is valuable for anybody with an interest in monitoring overall business health.
When monitoring Secretary of State records, there are some key fields that we want to keep a close eye on, such as: Business Name, Status, Business Officers, and Addresses. Changes in any of these fields should alert lenders or stakeholders to potential risks or changes in the business stability profile.
Examples of Significant Events:
Sequential Events
If a business changes its status to inactive and then reactivates a short number of months later with a new address and different business officers, this sequence of events is significant and should be flagged as it indicates a possible change in ownership. Sometimes these could be signals for fraudulent activities.
Key Personnel Changes
The removal of a business officer, especially someone with a title like Owner or Chief Executive Officer, without a replacement can indicate instability and can be treated as a risk signal.
Consistent Annual Report Filings
A business that has consistently filed an annual report each year for the past 20 years can be viewed as very stable.
Livesight enables lenders to automate their KYB processes. Additionally, it allows for the automatic monitoring of their portfolio businesses for key changes, not only in Secretary of State records but also in other critical information such as primary industry code, employee count, social media activity, estimated revenue, website, and social media presence.
Conclusion
Continuous monitoring of Secretary of State records is a powerful tool for accurately assessing business risk and ensuring stability. By keeping an eye on key changes, you can stay ahead of potential issues and make informed decisions. Ready to take your risk assessment to the next level? Book a free demo of Livesight today to discover how our nationwide entity resolution engine can revolutionize your KYB processes and help you gain deeper insights into the businesses you work with. Don't wait—enhance your business risk evaluation with Livesight now!
