The Buyer's Due Diligence Checklist: 15 Steps Before Signing With a New Supplier

A structured due diligence process is the single most effective tool for avoiding the counterparty failures that cost trading companies significant amounts annually. This framework — compiled from the due diligence procedures of our highest-rated Verivex-certified members — provides a 15-step process that covers the essential bases without creating unnecessary friction in the sales process.

STEP 1: Legal Entity Verification. Confirm the supplier's legal name, registration number, registered address, and jurisdictional standing through official commercial registries. Verify that the company is in active status and not subject to dissolution or administrative proceedings.

STEP 2: Beneficial Ownership. Identify the ultimate beneficial owners of the supplier entity. In most jurisdictions, beneficial ownership registers are publicly accessible. Verify that no beneficial owner is a sanctioned individual or entity.

STEP 3: Sanctions Screening. Screen the company name, all known directors, all identified beneficial owners, and (where applicable) vessels or logistics providers against OFAC, EU, UK, and UN sanctions lists.

STEP 4: Financial Health Assessment. Request and review the most recent two years of financial statements. Look for signs of financial distress: declining revenue, deteriorating margins, increasing leverage, or negative working capital.

STEP 5: Bank Reference. Request a bank reference letter confirming satisfactory account relationship. Contact the bank directly to verify authenticity.

STEP 6: Reputation Research. Review all available third-party reputation evidence: review platforms, industry publications, LinkedIn, news searches, court records databases.

STEP 7: Reference Calls. Conduct direct telephone reference calls with a minimum of two existing customers or commercial counterparties. Do not accept email-only references.

STEP 8: Operational Site Visit or Third-Party Inspection. For significant suppliers, arrange a site visit or commission a third-party physical inspection of the supplier's facilities.