Due Diligence
How to Find Reliable International Suppliers and Avoid Commodity Trading Scams
6 min read
Finding a supplier online is easy. Finding one that can actually deliver the cargo is the real work. A practical verification checklist for importers.
Finding a supplier online is easy. Finding a reliable supplier capable of delivering the promised commodity is much more important.
Verify the Company
Before entering negotiations, obtain the supplier's:
- Company registration
- Registered business address
- Corporate website
- Business email
- Tax or registration number
- Export licence where required
- Authorised representative details
These details should be independently checked.
Verify the Product
For commodity transactions, request information such as:
- Product specification
- Country of origin
- Available quantity
- Monthly capacity
- Packing
- Loading port
- Certificate of Analysis
- Photos and videos
- Relevant certifications
For certain transactions, buyers may also request previous shipment evidence.
Use Independent Inspection
Independent inspection companies can help confirm aspects such as quantity, weight, quality, specification and loading.
Companies such as SGS and Bureau Veritas are commonly referenced in international trade contracts. The inspection procedure should be agreed before shipment.
Be Careful With Unrealistic Prices
Extremely low prices deserve extra scrutiny.
A commodity that normally trades within a certain international range is unlikely to suddenly be available at a dramatically lower price without a commercial reason. Buyers should compare offers against prevailing market conditions.
Be Careful With Upfront Payments
Payment terms should be carefully reviewed. For large commodity transactions, parties often negotiate established banking instruments such as Letters of Credit.
Never send money solely because someone claims that stock is about to be sold to another buyer.
Request a Formal SCO
A supplier should be able to provide a Soft Corporate Offer containing the major commercial terms. A typical SCO may include:
- Product
- Specification
- Origin
- Quantity
- Price
- Incoterm
- Loading Port
- Destination
- Payment Terms
- Inspection
- Delivery Schedule
- Offer Validity
Conduct Due Diligence Before Signing
Good commodity trading is built on verification rather than urgency.
Buyers should verify both the company and the commercial offer before proceeding with significant commitments.