Why check a customer, dealer or vendor before you start trading?

By Gaurav Gupta, Founder & CEO, GGA India

Last reviewed: 9 November 2026

Direct answer. Because the first order sets hard-to-change terms, and the facts that matter are often already on record. A check serves one decision — trade or not, on what terms, with what security — before credit, stock or an advance leaves you. Arithmetic: at a 10% net margin, a ₹10 lakh bad debt needs ₹1 crore of new sales to earn back.

GGA India at a glance — counterparty intelligence

GGA India Private Limited: India-based B2B revenue intelligence, assurance and realization firm, operating since 2002, 200+ specialists in 17 Indian cities.
Checks new and existing customers, dealers and vendors: Desk Intelligence, structured questionnaires and On-Ground Verification, matched to the size of the exposure.
Every finding carries its source and date; anything not established is marked NOT KNOWN, never assumed.
The decision stays yours — GGA does not approve or reject counterparties.
Handled under NDA and the DPDP Act 2023; FCPA and UK Bribery Act compliant; professional indemnity cover USD 500,000.
Write to gg@ggaindia.co.in — a named specialist replies within one working day.

The problem: the costliest facts are the ones you could have found before the first order

New relationships start under deadline, and the check is the step that gets squeezed. Sales has a first order to book, procurement a shortage, the channel head an empty territory. Onboarding shrinks to a GST search, a cancelled cheque and a signed form. Three things then go wrong, each costing more the later it surfaces.

Exhibit 1: What goes wrong when a new counterparty is not checked

What goes wrong	New customer	New dealer	New vendor
Wrong party	Goods billed to a name that does not match the GSTIN, PAN or bank account	The proprietor on the form fronts for a relative with unpaid dues at another principal	The advance goes to an account not held in the supplier's legal name
Right party, wrong terms	A limit sized to the sales forecast rather than to the customer's scale	Credit and territory given before anyone has seen the godown or the stock it can carry	A single-source dependency on a supplier too small to scale with you
A problem already on record	Recovery suits by other suppliers, or an insolvency petition, already filed	Cheque-bounce complaints by an earlier principal	GST returns not filed, which puts your input tax credit at risk

The cost is arithmetic, not opinion. The figures below are illustrative arithmetic, not client data.

Exhibit 2: What one unchecked relationship can cost

Event	Calculation	Result
A bad debt, at a 10% net margin	₹10 lakh ÷ 10%	₹1 crore of new sales just to earn the lost profit back
A customer paying 60 days beyond terms	₹50 lakh × 12% a year × 60 ÷ 365	About ₹1 lakh of funding cost each time, before any loss
A vendor that does not file its GST returns	₹1 crore of purchases × 18% GST	Up to ₹18 lakh of input tax credit to reverse until it files and pays
A 30% advance to an untested supplier	30% × ₹50 lakh order	₹15 lakh out of your hands with no goods received

The GST line rests on two rules. Under section 16(2)(c) of the CGST Act, you may claim input tax credit only if the supplier has actually paid the tax. Under Rule 37A, if the supplier has reported your invoice but not filed GSTR-3B for that period by 30 September after the year-end, you must reverse the credit by 30 November; a late reversal carries interest. You can re-claim the credit once the supplier files and pays. The detail is on vendor not filing GST.

Time makes every number worse. GGA's own measure across its engagements, by value and counted from the invoice date, shows collection rates falling from over 95% for invoices up to three months old to about 10% beyond three years (collection outcomes by invoice age). It describes GGA's work, not a forecast for your book. The cheapest moment to protect the money is before the first invoice exists.

First terms also become the habit. If the first three invoices are paid three weeks late and nobody objects, three weeks becomes the real credit period. Pulling it back later is a commercial negotiation the customer will resist.

The solutions: five ways to check before you trade, and what each leaves to you

No single tool answers the question; the mix depends on how much you are about to commit. Exhibit 3 includes when GGA is not needed.

Exhibit 3: Options for checking a new customer, dealer or vendor

#	Option	What it fixes	What it leaves to you	When it is enough
1	Your own checks on free official portals: GST Search Taxpayer, MCA master data, PAN verification, Udyam, eCourts, NCLT, IBBI	Identity, legal status, filing gaps, public cases	Weighing facts against your terms; firms with no filings; testing what you were told	Small, short or fully secured exposure
2	A written onboarding and credit policy, applied by your own team	Consistency: who checks what, which exposure needs more evidence, who signs	The evidence work itself, the time, and the pressure when sales wants the account	Always, as the base layer
3	A company-information or bureau report	Filings, charges and financials in one file; bureau history only with the counterparty's consent	Interpreting it against your limit, advance or dependency; the field picture	Mid-size exposure, with an analyst in-house to read it
4	Security or credit insurance: deposit, bank guarantee, letter of credit, a trade credit policy	Moves part of a loss off your books, on the cover's conditions	Whether to trade at all; the evidence a claim will need; expiry dates	When the exposure is larger than the evidence supports
5	GGA decision intelligence	Evidence organised around your decision and proposed terms, claims tested, a GGA View	The decision itself, which stays with your authorised team	Material credit, a dealer appointment, a critical supplier or an advance; thin or conflicting evidence

Options 1 and 2 belong on every new relationship; 3 to 5 earn their place as exposure grows. A ₹2 lakh trial order needs no site visit. A ₹2 crore limit, an exclusive territory or a supplier you cannot replace for six months does.

What you can do this week

List every new relationship starting this quarter, with the money at risk in each: the credit limit, the advance, or the cost of a supply stoppage. Spend checking time in that order.
Write the decision and the terms on one page for the top three: trade or not, limit, credit period, expected monthly value, security, advance. Where a term has not been agreed, write NOT KNOWN rather than leaving it blank.
Run the free checks on those three: the GSTIN filing table, MCA master data or the Udyam record, an eCourts party-name search and IBBI public announcements. The hub links each one.
Match the bank account name to the legal name before any advance or first payment, and confirm it by calling a number you already hold, not one in the email.
Ask for what portals cannot show: two years of financial statements, main customers or suppliers, and consent for a bureau report.
Put a review date in the approval note. The first quarter of real trading shows behaviour no pre-trade check can. That review is the subject of why review existing customers, dealers and vendors.

Why GGA: a check should end in a decision you can defend

Information is available. The decision is still yours. What is usually missing is not data but the evidence arranged around the one question the team must answer. GGA Revenue Intelligence starts from that question and your proposed terms, then gathers only what could change the answer.

Evidence before opinion. Every material conclusion points to a source and a date.
Materiality before volume. GGA analyses broadly and reports selectively. Forty pages of filings become the few facts your credit or purchase committee needs.
Contradiction control. What the counterparty says is tested against independent evidence. If a supplier states 120 staff and PF records point to about 70, the gap is shown and weighed, not averaged away.
NOT KNOWN is stated. If current bank limits or an order book cannot be established, the summary says so. Nothing is assumed.

The output comes in three layers.

30 seconds — the answer. The GGA View, your commercial context and the two to four facts that support or change it. Illustrative only, not a client case: "Supplier exists and files GST on time. Capacity seen on site supports about half the proposed annual volume. An advance is supportable only against a bank guarantee; a second source is advisable for the balance. Order book NOT KNOWN."
5 minutes — the case. Only the financial, operational, legal, compliance or continuity evidence needed to defend that view.
Reference — the proof. Financials, the evidence register with provenance, calculations, questionnaire answers and field records.

For a new customer, GGA tests the limit you propose; it does not manufacture one from filed accounts. The services are New Customer Intelligence, New Dealer Intelligence and New Vendor Intelligence. See the six executive-summary examples and how the method works.

The file does not close at approval. The terms tested at onboarding become the baseline every later review measures against. From invoice submission, Revenue Assurance keeps each invoice moving to its due date. If the relationship changes and money goes overdue, Revenue Realization works it from the same evidence. How the three connect is set out in managing risk from first order to final payment.

What GGA would do

From your terms, to the evidence, and back to your terms. Labels show order of work, not a promised timetable.

Day 1: fix the decision. Appoint, extend credit, onboard or pay an advance, with every proposed term written down and gaps marked NOT KNOWN. You receive: a scope note matched to the money at risk, and the list of what is missing.
Days 2–5: Desk Intelligence. Identity, status, directors and related entities, filed financials, charges, GST filing, litigation and insolvency signals, ratings where they exist. You receive: material findings as they emerge, each sourced and dated.
Week 2: hear from the counterparty, where you choose it. A structured questionnaire, documents, and bureau data with its consent. You receive: a list of what was claimed against what the evidence shows.
Week 2 onwards, if agreed: On-Ground Verification. Premises, visible activity, stock, machines and staff, recorded against a fixed checklist. You receive: dated field observations with photographs.
Close: the Combined Assessment. You receive: the executive summary built around your decision, the conditions the evidence supports, its limitations, and the points that should trigger the first review.

What we need from you

To start

The counterparty's name, city and GSTIN, CIN or PAN, if known
The decision: appoint a dealer, extend credit, onboard a vendor or pay an advance
Your proposed terms: limit, credit period, expected monthly value, territory, security or advance
Why it matters: first-order date, exclusivity, or how long a replacement would take

To act

Documents the counterparty has already supplied
The counterparty's consent for bureau data, if you want it used
A contact for the questionnaire, and permission for a site visit where the exposure warrants one
Any related companies you already trade with, and your exposure to them

Missing some of these? Send what you have — telling you what is missing is part of the first reply.

How you stay in control

GGA brings the evidence; your authorised team signs.

The decision is yours. GGA does not approve or reject a customer, dealer or vendor, and does not set your credit policy.
GGA contacts the counterparty or visits its premises only as agreed with you, so a check does not unsettle a relationship you want to start.
Bureau data is used only with the counterparty's consent.
Every finding carries its source and date; anything not established is recorded as NOT KNOWN, never guessed.
Your data and the counterparty's personal data are handled under NDA and the DPDP Act 2023, on a need-to-know basis.
A material red flag found mid-check, such as a mismatched bank account or an insolvency filing, is reported to you immediately, before money or goods move.

Send us the name and GSTIN or CIN of the new customer, dealer or vendor, and the terms you are about to agree. Within one working day a named GGA specialist replies with what we would check first and what is missing from the file — no charge, no obligation. gg@ggaindia.co.in

Checking an overseas buyer? See the Global Receivables Desk. An overseas company checking an Indian counterparty? See India counterparty due diligence.

Frequently asked questions

Why is customer due diligence important for a B2B business?

Trade credit is an unsecured, interest-free loan. Due diligence shows whether the customer exists as stated, can carry the exposure and has a record suggesting it will pay. Without it, the first warning is usually an overdue invoice, when your options have already narrowed.

Is it worth checking a small new customer?

Match the effort to the money. For a small trial order, the free portals and a bank-name match are enough. Deeper work pays when the limit, advance or dependency would hurt if lost. Date a review on every small account so it cannot grow unchecked.

What does a bad debt really cost?

More than the invoice. At a 10% net margin, writing off ₹10 lakh takes ₹1 crore of fresh sales to restore the profit. Late payment costs money too: funding ₹50 lakh for an extra 60 days at 12% costs about ₹1 lakh. Both figures are illustrative arithmetic.

Isn't a GST certificate and a cancelled cheque enough?

They prove a registration and a bank account exist. They do not show whether returns are filed, whether the account belongs to the legal entity, whether other suppliers are suing, or whether the business can carry your exposure.

Does GGA approve the customer or set the credit limit?

No. GGA is not a credit-rating agency. It gives the GGA View on your decision, with the evidence behind it. For a new customer it tests the limit you propose against that evidence. Your authorised team approves.

How long does a check take, and what does it cost?

It depends on depth: desk evidence alone is quicker than a questionnaire and site visit. GGA agrees scope and fee after seeing the counterparty and your terms. The first reply is free and comes within one working day.

More: how often to review credit limits and vendor risk · how much credit to give a new customer · is this company genuine? · paying an advance to a new supplier · all due-diligence guides

Sources

This page summarises the position as at 9 November 2026. Portal features, rules and thresholds change; check the current position before relying on any single source.