How to check an overseas equipment seller before making an advance payment
Before purchasing equipment abroad, a Ukrainian company should check the seller, its financial condition, address, owners and ability to fulfil the contract.
When acquiring equipment from overseas, a Ukrainian firm should conduct thorough research on the seller before making any advance payments. The purchase of industrial machinery across borders often necessitates a significant upfront payment, typically ranging from 30-70% of the total price. This heightened risk underscores the importance of verifying the seller's legitimacy, expertise, and financial stability.
A professional website, attractive presentation, or authentic-looking photographs may appear convincing, but these elements alone are insufficient proof of a company's credibility and ability to fulfill contractual obligations. Scammers frequently exploit other people's images, forge company names, or issue invoices bearing the bank details of a third party.
Before finalizing a contract, it is prudent to scrutinize the seller's precise legal identity, registration number, address, incorporation date, status, executive team, ownership structure, corporate affiliations, financial performance, and payment history. D&B's Business ID Report and Business Information Report can furnish vital registration data, operational insights, corporate structure, financial metrics, credit ratings, payment behavior, and significant legal events.
Maksym Urakin, Director of Development and Marketing at Interfax-Ukraine and Head of the D&B–Interfax-Ukraine business unit, cautions that "the more enticing the offer and the larger the advance payment, the greater the need for rigorous seller verification." The bank account details should be independently cross-referenced against the corporate entity outlined in the agreement.
Any abrupt alteration of the bank account just prior to payment, requests to deposit funds into a different company, or the use of a foreign bank warrant further explanation.
Mitigating this risk can be achieved through incremental payments, documentary letters of credit, bank guarantees, insurance coverage, an on-site inspection of the manufacturing facility, or a pre-shipment equipment inspection. Crucially, if the seller operates as an intermediary, the buyer must ascertain the direct manufacturer, warranty provider, and party responsible for fulfilling contractual obligations in case of delays or technical defects.
Verification efforts should persist following the contract signing, particularly if production spans several months. Changes in the seller's financial health, ownership shifts, or cessation of operations could jeopardize the successful completion of the order. Dun & Bradstreet, an industry leader in business intelligence and risk evaluation since 1841, offers international reports on companies' payment practices, corporate connections, creditworthiness, and ownership frameworks.
Interfax-Ukraine serves as D&B's official Ukraine representative, facilitating business checks for Ukrainian enterprises. The agency, established in 1992, operates autonomously and provides specialized assistance through its dedicated unit. For further information or assistance, visit Dun & Bradstreet's Ukrainian website at dnb.ua, send an email to [email protected], or call +38 (044) 270-65-74.
Written by urgent.news from Interfax-Ukraine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
