How to check a supplier before you pay

Most bad first orders have the same causes: a supplier who isn't who they say they are, goods that don't match the sample, or payment sent to the wrong place. These seven checks take a few days and can save you the whole order.

1. Confirm the business is real

Ask for the company's legal name and registration number, then check it. For Canadian companies, search the federal or provincial business registry. For suppliers abroad, ask for their business licence and check that the name matches the one on their invoices and bank account.

2. Ask for references, and call them

Ask for two or three customers who bought something similar. A short call tells you a lot: did the goods arrive on time, and did they match what was promised?

3. Get samples before the production order

Ask the supplier to ship a sample directly to you, and expect to pay for the sample and its shipping. Once you approve one, keep it: it becomes the reference the production order must match.

4. Put everything in writing

Write down the materials, sizes, colours, quantities, packaging, labels, price, delivery date and payment terms. Approve artwork in writing. Vague orders lead to arguments later.

5. Check the certifications your product needs

Some products must meet Canadian rules before you can sell or use them. Electrical equipment needs a certification mark accepted in Canada, such as CSA or cUL. Cosmetics, medical devices and children's products have Health Canada rules. Ask for test reports and certificates, and check they are genuine.

6. Use safe payment terms

• Pay only to a business bank account in the supplier's company name, never a personal account.
• Be very careful if bank details "change" by email. This is one of the most common frauds. Confirm by phone using a number you already had.
• For larger orders, pay a deposit and the balance after inspection, rather than 100% upfront.

7. Inspect before the goods ship

For orders from abroad, a pre-shipment inspection by an independent inspector checks a random sample against your specifications before you pay the balance. It is far cheaper than fixing a problem once the goods have arrived.

Red flags

• A price far below every other quote
• Pressure to pay quickly, or a discount if you pay today
• Refusal to send samples, do a video call or show the factory
• Bank details that change, or a request to pay a different company
• No written contract or order confirmation