How to verify a new overseas supplier before paying them
Updated
Confirm that the company exists, that the person you are talking to works there, and that the bank account you are paying belongs to that company. Then test with a small order before a large one.
1. Confirm the company is real
- Get the full legal name, registered address and registration number, and check them against the business registry in the supplier's country or an independent business-information service.
- Compare what they tell you with what you find: address, years in business, product range.
- Look for the company in news, trade-show listings and third-party reviews. A company with no footprint anywhere is worth questioning.
- Make sure the website, email domain and business name match. Free email addresses and look-alike domains are common in fraud.
2. Confirm the people
Do a live video call, not just chat. Ask to see the office, warehouse or production line, and ask specific questions about your product. Ask for references from other buyers and contact them.
3. Check how the supplier wants to be paid
This is where many scams show up. The FBI's Internet Crime Complaint Center warns that criminals take over or imitate real email accounts to request fund transfers, and recommends confirming any change to payment details through a separate channel (IC3). Apply that to every supplier:
- The account name should match the supplier's legal company name on the contract and invoice.
- Be cautious if you are asked to pay a personal account, or a company in a different country from the supplier.
- If bank details change mid-deal, confirm by phone using a number you already had, not one from the email announcing the change.
4. Start small and inspect
Place a sample or low-value first order. Check the goods against the agreed specification. For larger orders, consider a pre-shipment inspection by an independent inspection company.
5. Put it in writing
A purchase order or contract should name both legal entities and state the product specifications, quantity, price, payment schedule, delivery terms and what happens if goods are wrong or late. A supplier who resists written terms is giving you information.
6. Stage the payments
Where you can, avoid paying everything up front. Common patterns are a deposit with the balance due against shipping documents, or small first orders that grow as trust builds. Each stage gives you a point to stop if something looks wrong.
Where Shield fits
If you pay suppliers from a US business account, Shield lets you send wire payments to suppliers. Shield also pays suppliers in China and Hong Kong. Payments are screened before they process. Running supplier payments through one account also gives you a single record of every transfer for your books and for any dispute.
FAQ
Do I need to visit the supplier in person? Not always. A live video tour, a sample order and an independent inspection can cover much of the same ground. For a large, long-term relationship, a visit is worth the trip.
What is the biggest red flag? A request to send money to a different account than the one on the contract, especially with urgency. Stop and verify by phone.
Should I pay a deposit to a supplier I have not verified? Verify first. If you must pay before everything is confirmed, keep the amount small and send it only to an account in the supplier's verified legal name.
Next step
To pay suppliers from a US business account, see Shield business accounts.