A supplier due diligence checklist starts with one rule: check the supplier before you pay, not after. Most problems a buyer meets with a new supplier could have been found with a few public checks. This note lists those checks in the order we would run them. It takes a few hours and costs very little.
1. Confirm the company exists
Start with the official company registry. A real, active company will be listed there. A name on a quote or a website proves nothing.
In Singapore, the registry is run by ACRA. Its free online search shows basic details, such as whether the business is live and its registered address. Paid business profiles add the people who hold positions in the company. In Hong Kong, the Companies Registry lets you search registered companies online and at its office. Those searches cover the documents the company has filed.
Match four things against what the supplier told you: the exact legal name, the registration number, the registered address and the status. If any one of them differs, ask why before you go further.
Sources: ACRA (acra.gov.sg); Companies Registry, Hong Kong (cr.gov.hk).
2. Check who sits behind the company
The registry also names directors and other officers. Write down who they are. Then run each name through a plain web search with the word "dispute" or "court." You are looking for a pattern, not one bad review.
Also look at how old the company is. A firm that was formed three weeks ago and offers a big, complex order is a warning sign. It does not mean fraud. It means you should ask for more proof.
Check that the person you talk to is tied to the firm. Ask for a business card, a company email address and a landline. A supplier who only uses a free email account and a chat app is harder to trace if something goes wrong.
Sources: ACRA (acra.gov.sg); Companies Registry, Hong Kong (cr.gov.hk).
3. Ask for licences and certificates
Many goods and services need a licence or a certificate. Ask for a copy, then check it with the body that issued it. Do not rely on the copy alone. A scan is easy to edit.
- Business or trade licence for the country where the goods are made.
- Export licence, if the product is controlled.
- Quality certificates the buyer needs, such as ISO 9001, with the certifier's name and the certificate number.
- Product tests or safety marks that your market asks for.
Write the issuer, number and expiry date in your file. If the supplier cannot give a number, treat the document as unproven.
4. Call two references
Ask for at least two customers who bought something similar in the last year. A good supplier will have them ready. A weak one will say the clients are confidential.
Keep the call short. Ask five things: did they ship on time, did the goods match the sample, how were problems handled, did the price change after the deal, and would they buy again. Note the answers the same way for every supplier, so you can compare them fairly.
If you can, also speak to a customer the supplier did not pick. A mutual contact or a trade group can often help.
5. Visit the site, or send someone who can
If you cannot travel, ask a local inspection firm or a trusted contact to visit. Spring 2021 travel limits make this common, and a video walk-through is a fair second best. Ask for it live, not recorded, so you can steer it.
At the site, check these points:
- The address matches the registry record.
- The name on the door matches the legal name.
- The machines, stock and staff fit the size of the order.
- Quality checks are written down and followed.
6. Test the money and the paperwork
Pay the invoice into an account in the company's own name, in the country where it is registered. Be careful if the supplier asks you to pay a third party or a personal account. Confirm any change of bank details by phone, using a number you found yourself.
Start with a small first order. Use a written contract with the legal name, delivery terms, quality terms and what happens if goods fail. Keep every record in one folder. If a dispute comes up, your file is your proof.
Finally, set a review date. Repeat the registry check every year, because a company's status, address and directors can change.
Sources: ACRA (acra.gov.sg). The remaining points in this note are general procurement practice.
Sources
- ACRA, Accounting and Corporate Regulatory Authority, Singapore: https://www.acra.gov.sg
- Companies Registry, Hong Kong: https://www.cr.gov.hk