Due diligence on a foreign partner is a step that companies often skip on their first export deals and pay for later with an unpaid invoice. It is worth checking the company's existence and registration in the local register, the authority of the person to act on its behalf, financial statements if they are public, and payment discipline, on which a rating can be obtained from credit insurers or information agencies. References from other suppliers and verification of the tax identification number in the European system are also useful. On a first deal, it is recommended to reduce risk through payment terms – a deposit, payment in advance or a letter of credit – or through receivables insurance, which also includes checking the buyer. The cost of due diligence is negligible compared to the value of the order.
See also: Export financing and insurance, Governing law and jurisdiction, Register of Financial Statements.
