Safe payment and avoiding fraud

The most dangerous moment in sourcing is the moment of payment. Most large losses come from a full advance payment to a party that was never verified.

Basic rules

• Pay to an account in the name of the same company shown on the licence and the contract, not to a personal account.
• Split payment: a deposit when production starts and the balance after inspection and before shipping, or whatever both sides agree.
• Use the payment protection a platform offers if you buy through one.
• Keep transfer receipts and all messages.
• Do not pay before you have received a sample and vetted the supplier.

Examples of fraud

• A new supplier asks for full payment at a far lower price.
• A message changes the bank account details at the last moment. Always verify by calling a number you already know.
• A supplier who disappears after the deposit and cannot be reached.

Payment options

Bank transfers, letters of credit and protection services differ in fees and security. Choose what suits the size of the order, and ask your bank about the fees and the time.

Exercise

Write a payment schedule for your first order with percentages and dates tied to stages. And decide how you will verify the account details before any transfer.