Verify a supplier's identity, capability, bank details, sample and contract before releasing a deposit, then match payment stages to evidence received.
Short answer: Before paying, independently verify the supplier's legal identity, operating address, bank details, recent delivery evidence and ability to make your exact specification. Approve a representative sample, agree written acceptance and remedy terms, then release the smallest deposit that funds the next observable milestone. Stop if the payee, contracting party and evidence do not match.
A polished website, company number and quick replies do not prove that a supplier controls a factory, can meet your tolerances or will deliver. Fraud is one risk. Ordinary overpromising is more common and can be just as expensive.
The deposit should purchase progress you can verify. It should not ask you to trust the entire order before the supplier has proved the first stage.
> Jurisdiction note: Registry information, insolvency processes, contracts and payment recovery vary by country. This article gives a UK operating approach, not legal advice. For a material or cross-border deposit, ask a qualified solicitor and relevant financial or trade professional to review the counterparty, terms and jurisdiction.
Use the Deposit Release Protocol
The Deposit Release Protocol is a six-gate framework. Do not compensate for a weak early gate with reassuring behaviour at a later one.
- Identity: Evidence to obtain: Exact legal name, registration or proprietor details, address and tax information where relevant; Failure that stops payment: Names differ without a documented explanation
- Control: Evidence to obtain: Independent contact through a verified channel and confirmed bank ownership; Failure that stops payment: Bank change arrives only by email or messaging app
- Capability: Evidence to obtain: Current equipment, people, materials and subcontracting route for your specification; Failure that stops payment: Generic portfolio but no process evidence
- Performance: Evidence to obtain: Recent, comparable customer references and delivery records; Failure that stops payment: References cannot be reached independently
- Product: Evidence to obtain: Representative sample or first article checked against written acceptance criteria; Failure that stops payment: “Golden sample” cannot be tied to production
- Contract: Evidence to obtain: Quantity, specification, dates, payment stages, inspection, rejection and remedy terms; Failure that stops payment: Deposit becomes non-refundable before measurable work
My position is that a supplier who refuses proportionate verification has disqualified themselves. The promised saving is irrelevant. You are not accusing them of dishonesty; you are testing whether their operating discipline is compatible with yours.
Verify identity outside the sales conversation
Ask the supplier for its full contracting name, company or proprietor number where applicable, registered and operating addresses, directors or owners, telephone number and bank beneficiary. Then find the same information independently.
For a UK limited company, the Companies House search provides details including registered address, officers, filings, charges, previous names and insolvency information. Read recent filings and note overdue items or rapid changes, but do not treat registration as proof of trading capability or solvency. A new company can be legitimate; an old company can still fail.
For an individual or sole trader in England and Wales, the official insolvency register can provide relevant public information. Scotland and Northern Ireland have separate linked registers. Apply checks lawfully and proportionately, and do not infer more than the record establishes.
Call a number you found independently, not the number in an email announcing changed bank details. Ask the supplier to confirm the invoice number, beneficiary name and last four characters of the account. If the beneficiary differs from the contracting party, pause until a documented commercial and legal explanation has been checked.
Test capability against your exact specification
Request evidence of the process that creates your product: equipment, production steps, quality checks, material sources, capacity and work that will be subcontracted. A video call through the operating site can support other checks, but it is not enough alone.
Choose two recent references whose orders resemble yours in product, value and deadline. Contact them through independently found details. Ask what was late, wrong or difficult, not whether the supplier was “good”. Useful questions include:
- What quantity and specification did the supplier deliver?
- How close was the confirmed date to actual receipt?
- What defect or dispute occurred, and how was it resolved?
- What changed after the deposit was paid?
- Would the customer trust the supplier with a larger prepaid amount?
References selected by the supplier will be favourable. You are testing specificity and consistency, not estimating a satisfaction rate.
Turn the sample into an acceptance test
Write measurable acceptance criteria before asking for a sample. Dimensions, material, colour reference, weight, finish, packaging, labelling, file format or service output should be unambiguous enough for a third party to inspect.
Mark and retain the approved sample. State whether production must match it and which written specification wins if the two conflict. For products where safety or regulatory compliance matters, use a competent independent laboratory or adviser. A supplier's certificate must relate to the right product, production and requirement.
Never approve a sample because the launch date is close. A four-millimetre difference can make packaging unusable even when it looks excellent in a photograph.
Match cash to observable progress
Ask what the deposit specifically funds. Custom raw material or tooling may justify an advance. A standard stocked item often justifies less.
Break payment into milestones where the order value supports it: a small amount to begin, another after an approved first article or verified material purchase, and the balance after agreed inspection or before a controlled dispatch. The exact split is negotiated, not universal.
Define evidence for each milestone. “Production started” is not evidence. A dated inspection of named goods, a verifiable material invoice or an approved production sample can be.
Consider how you pay, but do not assume a payment method guarantees recovery. Confirm current provider terms, limits, eligibility and dispute process yourself. Never split or misdescribe a transaction to manufacture protection.
Worked example: Marshlight Soapworks
Marshlight Soapworks wants 12,000 printed cartons for bottled hand wash. The supplier quotes £0.48 each plus £640 for printing plates and setup.
Order total = 12,000 × £0.48 + £640 = £5,760 + £640 = £6,400.
The supplier requests 50% upfront, so the deposit would be £6,400 × 50% = £3,200.
Marshlight applies the protocol before paying:
- Founder verification time: Calculation: 5 hours × £32; Cost: £160
- Short printed sample run: Calculation: Supplier quote; Cost: £180
- Independent fit and material check: Calculation: Specialist quote; Cost: £260
- Total pre-deposit evidence cost: Calculation: £160 + £180 + £260; Cost: £600
The fit check finds that the internal depth is 4 mm short. The bottle cannot close inside the carton. A local finisher quotes £0.12 per carton to alter a completed run, which would cost 12,000 × £0.12 = £1,440, assuming alteration were possible.
Marshlight corrects the dieline, approves a second sample within the same £180 sample arrangement and negotiates 20% on production start, 30% after inspection and 50% before collection. The first cash release falls from £3,200 to £6,400 × 20% = £1,280. Spending £600 did not merely check legitimacy. It prevented the business funding a measurable specification failure.
Treat warning signs as a pattern
One unusual fact can have an innocent explanation. Several connected inconsistencies should stop payment.
High-risk combinations include a recently changed company name, invoice from another entity, beneficiary in a third name, pressure for same-day payment, refusal of video inspection, copied product images and a price far below comparable quotes. Do not ask the sales contact to explain the whole pattern and then accept the explanation as verification. Check each fact at its source.
A supplier asking sensible questions about your specification is usually a better sign than instant agreement to every date and price. Competent production involves constraints.
Related guides
Complete the checks within five working days
Today, freeze payment and send the six-gate evidence request. Independently verify identity, addresses and contact details by day two. By day three, speak to two comparable references and complete the bank-detail check through a trusted channel.
Approve the written specification and representative sample by day four. On day five, revise the contract and payment stages so each release follows observable evidence. If any material name, capability or remedy remains unresolved, choose another supplier or obtain specialist advice. A launch date is not a reason to transfer unprotected cash.
Frequently asked questions
Is a Companies House listing enough to prove a supplier is legitimate?
No. It confirms public information about a registered company, but it does not prove that the sales contact controls it, the bank account belongs to it, filings are accurate, or it can fulfil your order. Match the company number, name, address, officers and filings to the quote and invoice.
Then verify control through an independently found contact route and test capability with samples, references and process evidence. Sole traders and overseas entities require different sources. Treat the register as one identity gate, not a quality mark or guarantee of recovery.
How much deposit is reasonable for a supplier to request?
There is no universal percentage. A reasonable deposit reflects the supplier's irreversible cost before the next stage, such as custom material, tooling or reserved production capacity. Ask for the calculation and negotiate payment against observable milestones.
Fifty per cent may be commercially explainable for highly customised work, while it may be excessive for standard stock. Compare your maximum loss if the supplier fails with the evidence received at that point. If the amount would threaten your business, reduce the order, use a safer structure or do not proceed.
What should I do if the supplier changes bank details?
Stop the payment and verify the change using a trusted channel established before the message arrived. Call an independently sourced number, speak to a known contact and confirm the beneficiary name and invoice. Do not reply to the same email thread or use a telephone number contained only in that message.
Ask for written confirmation through another verified route and tell your bank promptly if you have already paid. A genuine supplier will understand the delay. Treat urgency, secrecy or resistance to verification as reasons to escalate, not as customer-service inconveniences.
Can I rely on reviews and marketplace ratings?
Use them as leads, not proof. Reviews may concern a different product, order size, seller account or period, and you usually cannot inspect the underlying transaction. Look for specific patterns in dates, delivery, defects and remedies, then verify recent comparable customers independently.
A marketplace may offer rules or dispute processes, but eligibility and protection vary, especially for custom business orders. Read the current terms before paying. Your strongest evidence remains a matched legal identity, verified bank route, representative sample, clear contract and payment released after a measurable milestone.
What if the supplier refuses to provide customer references?
Ask why and offer alternatives that protect legitimate confidentiality, such as anonymised delivery evidence followed by a customer-approved call, an independent inspection, a smaller paid trial or payment after acceptance. Some capable suppliers cannot disclose clients, particularly in sensitive sectors. Refusal alone is not proof of fraud. Refusal combined with no site evidence, no sample, full prepayment and inconsistent identity is unacceptable. Reduce the deposit to match the evidence or walk away. Your need for stock does not turn missing verification into a manageable risk.
Should I visit the supplier in person?
Visit when the deposit, production complexity or failure consequence justifies the time and cost, but use a structured inspection. Confirm the address, equipment, staff, materials, capacity, quality records and the specific line intended for your order. A tidy reception and staged sample prove little.
If travel is impractical, appoint a competent independent inspector and specify what evidence you require. A video tour can support, but not replace, document, reference and product checks. For a small standard-stock order, a paid sample and modest payment exposure may be more proportionate.
What should the purchase terms say before I pay?
They should identify the correct parties, exact goods or services, quantity, price, tax treatment, delivery point, dates, specification, approved sample, inspection, acceptance window, ownership, payment milestones and remedies for delay or defects. Include which terms govern, how changes are agreed and how disputes are handled.
Cross-border language, jurisdiction and enforcement need particular care. Do not accept a quote, invoice and chat history as a substitute when the loss would be material. Ask a qualified solicitor to review bespoke or high-value terms before the deposit leaves your account.
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