How do I check a wholesale buyer before shipping on credit?

Confirm the business is real, get their tax ID on a W-9, call two trade references, and start with a small credit limit or prepayment on the first order. Raise the limit only after they pay on time. If you can't confirm who they are, don't ship on open terms.

Why it matters

Selling on open account means the buyer receives and resells goods before paying, typically in 30, 60 or 90 days. The US government's trade guidance for exporters calls open account one of the highest-risk options for the seller. The same logic applies to a new domestic buyer: you carry the risk until the invoice is paid.

The checks

1. Confirm the legal entity. Get the exact legal name, state and address. Look the company up on the Secretary of State site for the state where it was formed, and check that it is active.
2. Collect a Form W-9. The IRS says Form W-9 is used to give your correct taxpayer identification number to the person who must file an information return. It gives you the buyer's legal name and TIN to match against your records.
3. Use a credit application. Ask for bank details, owners' names, years in business and trade references, and have an owner sign it.
4. Call the trade references. Ask other suppliers whether the buyer pays on time and what terms and limits they have.
5. Check the address and contact. Does a real business operate there? Does the phone number reach a person at the company?
6. Look for a credit report. Commercial credit reporting services sell business reports, though newer companies may have thin files.
7. Watch for warning signs. A big first order with rush shipping, a personal email domain, a request to ship to a freight forwarder or a third-party address, or pressure to skip the credit application.

Set terms, then widen them

• First order: prepayment, a deposit, or a small credit limit.
• After two or three on-time payments: raise the limit in steps.
• Put it in writing: terms, due date, and what happens if the invoice isn't paid on time.

For international buyers

Use stricter terms. The trade.gov payment guidance says cash-in-advance lets the seller avoid credit risk, and calls letters of credit one of the most secure instruments available to traders. Our guide on letters of credit covers how those work for a small business.

Keep records

Save the credit application, W-9, reference notes and signed terms in one folder per customer. If an invoice goes unpaid, that record is what you'll point to. Our guide on bank readiness covers what to keep organized.

Where Shield fits

Selling on credit ties up your cash while you wait to be paid. Shield gives wholesalers US business accounts, a business credit card for supplier costs and a way to receive payments from buyers abroad, including stablecoins. Owners can live outside the US, with a US company.

FAQ

What credit limit should I give a new buyer? Start small, based on what you could afford to lose, and raise it as they pay on time.

Is a W-9 enough to trust a buyer? No. It confirms a tax ID and legal name. You still need references and to confirm the business is active.

Should I ever ship before payment to a new overseas buyer? Only if you're comfortable with the risk. Prepayment or a letter of credit is safer.

Next step

To see how Shield helps wholesalers manage payments, visit Shield bank accounts.