How do I conduct due diligence on a new overseas buyer?

Verify the Buyer's Identity and Business Activity

Obtain the buyer's full legal name, registration number, physical address, website, business contact details, and name of the person responsible for the purchase. Check the company using official business registries and independent sources. Confirm that its operations are consistent with the products requested and that the person communicating with you is authorized to represent the business. Ask for an explanation if the contracting party, delivery recipient, and paying company are different entities.

Assess Financial Standing and Payment Ability

For material credit exposure, consider a commercial credit report, available financial statements, bank references, and independently verified trade references. Review payment history where available and check whether the requested order size is consistent with the buyer's apparent scale and business activity. A large inquiry or claimed purchasing budget is not proof of financial strength. Select the depth of financial review according to the order value, payment terms, and risk of non-payment.

Screen Sanctions, Export Controls, and Intended Use

Screen the buyer, relevant owners, intermediaries, and other parties against applicable sanctions and export-control lists. For controlled or sensitive products, confirm the ultimate end user, destination, and intended use. Investigate unexplained intermediaries, unusual routing, inconsistent payment arrangements, or a buyer who refuses to disclose required end-use information. Resolve potential matches and licensing questions before proceeding with a regulated transaction.

Confirm the Commercial Opportunity Is Genuine

Check that the product specifications, quantity, delivery schedule, target price, and payment request fit the buyer's stated business needs. Clarify whether the company is making a genuine purchasing decision, evaluating suppliers for a future project, or requesting preliminary information. Be wary of unusual advance fees, requests to pay unrelated parties, false payment confirmations, overpayment and refund requests, or pressure to dispatch goods before payment has been verified.

Choose Suitable Contract and Payment Protections

For a first transaction, consider payment in advance, an appropriate letter of credit, or another method suited to the buyer's risk profile and the transaction size. If offering open-account credit, establish a credit limit, due dates, escalation procedures, and a plan for overdue invoices. Export credit insurance may protect eligible receivables against specified risks, subject to the policy terms. Use a written contract that defines the goods, delivery, payment, documentation, and remedies for breach.

Document and Refresh Your Due Diligence

Keep records of the checks performed, documents received, reference calls, screening results, credit decisions, and payment conditions agreed. Repeat or update checks when the buyer's ownership, destination, order profile, payment arrangements, or other important details change. For U.S. exporters, the International Trade Administration's foreign company and partner risk guidance is available at https://www.trade.gov/company-and-partner-risk. Risk-based due diligence should be proportionate to the transaction and revised when new warning signs emerge.