UK businesses are leaving themselves open to collapse by not checking that the companies they work with are fit to cope with the setbacks that might befall them.

Although SMEs are increasingly reliant on information technology, new research revealed that more than 80% of business had never checked if their suppliers had taken adequate precautions to secure their data. This could include financial information, customer data bases and countless other sources without which, their businesses might not survive.

This is part of an alarming picture, according to Mozy, a provider of online backup services which conducted the research. As businesses hand over a growing amount of work to third parties, over 56% perform no checks whatsoever on any part of their potential partners’ operations.

Claire Galbois-Alcaix of Mozy said: “You wouldn’t hire a supplier without requiring at least a month’s notice in the break clause, yet hardly anyone checks to see if their supplier is keeping a backup copy of the computer files related to their business. 60% of companies that suffer a major data loss couldn’t survive for more than 48 hours so it’s vital that, when businesses outsource functions to other companies, they check that they have a proper backup programme in place. Otherwise they could wake up one morning with a gaping hole in their business.”

In fact, information management policies are one of the least investigated aspects of due diligence for business outsourcing, the survey found. Only green and Corporate Social Responsibility credentials are checked less with less than 10% of SMEs carrying out any sort of investigation on their potential partners’ credentials.

Other important aspects of company performance that are not researched include: director and employee background (81.6%); employment practices (82.3%); adherence to industry standards and codes of practice (81.2%); company history and ownership (67.3%); financial viability (66.1%).

“In smaller businesses, office managers are often left responsible for dealing with partners and suppliers,” said Claire Galbois-Alcaix when explaining the impact of poor due diligence on the workplace. “When things go wrong, it’s often the poor office managers who chase from pillar to post trying to find a solution to plug the gap and appease the rest of the team as they struggle to carry on without the tools they need.

“Better due diligence before partnering would save everyone the difficulties of unpicking issues such as responsibilities, disputed agreements and withheld payments.”

Before beginning any partnership, companies should follow a few fundamental administrative and policy oriented steps to ensure they are protected. Mozy has developed a ‘due diligence check list’ that can be downloaded here and includes recommended top tips that companies should use when checking the business credentials of any company it is partnering with.