Vetting foreign business partners

Checking your business partner is necessary to conduct business abroad safely and successfully. Then you will know if your partner does business honestly and if they are reliable. And if the company is financially healthy. Whether you are buying or selling products. By checking your partner, you limit your risks.

In the Netherlands, you can check a company in the KVK Business Register. Many countries operate public registers similar to the Business Register. In these foreign registers, you can check if a company is registered. Dutch embassies abroad often know this as well. Or you can look up the company online. Before you do business with a foreign company, investigate their business acticities first. This article lists different methods for vetting your (potential) business partner. You always do this using a source abroad. Foreign companies are not registered in the Netherlands.  

Business Register

Most countries have a business register. In the Netherlands, the Netherlands Chamber of Commerce KVK manages the Business Register. Most countries have a different authority to register businesses. Germany uses several registers for businesses. For example, a Handwerksrolle and Gewerberegister.

A record in a business register does not guarantee that a company is trustworthy, but it does tell you if the business is legally registered in its country of origin. The register will also provide more information about the owner or management of the company. And the financial situation. Check out the list of business registers in and outside Europe. In these registries you can search for the name of a company.

Dutch embassies

Economic departments of the Dutch foreign network (in Dutch) can help you with investigating foreign partners. They check if your business partner actually exists. For example, some embassies conduct company checks, such as the embassies in Russia (in Dutch) and China (in Dutch). In such a check, the embassy checks the business on paper.

References

Ask your foreign partners for references of companies with which they partnered before. Contact these businesses and ask about their experiences with your potential partner. For example, does the company pay its bills on time? And does the company honour the agreements it has made?

Credit reports

Credit reporting agencies screen companies for a fee and prepare credit reports. This is how you know if your business partner is in good financial shape. You can find several agencies through online search engines. These agencies have the necessary international knowledge and experience. They also know which information they must verify.

Sector organisations

Check if the foreign company you want to do business with is a member of a local sector organisation. Sector organisations represent their industry and aim to build a good reputation with reliable members. Sector organisations will often set quality standards, allowing companies that meet these standards to use a quality mark. You can find out whether your business partner is a member of a foreign sector organisation by visiting the website of the organisation in question.

Online research

On the internet, you can find positive and negative reviews of your potential foreign business partner. A simple check via Google Maps on your potential partner's address can yield surprising results.  Keep in mind that fake reviews are banned in the EU, but the situation can be different outside of the EU.

Visit their website and take a close look at the following:

• their contact options. Does the website only mention a P.O. box or a mobile phone number? And no official branch address and landline number? You might want to investigate if the company actually exists.
• is the registration number of the company on their website?
• also check the email address. Does it look professional? An email address with the business name is more trustworthy than one with just the name of a person.

Online marketplaces

More and more companies buy and sell on foreign marketplaces. For example, the Chinese platform Aliexpress, where you can market B2B. On this marketplace, you pay via iDEAL. In addition, the platform protects buyers. For example, you can look at the number of sales of a supplier on the platform. This will tell you something about the reliability of their delivery. Also check whether the products look good in the picture. And if the foreign supplier or customer takes discussions with you seriously.

Plan a visit

If possible, schedule a visit to your business partner. Then you will get a good idea of your partner's activities and procedures. A visit will also help to build a personal relationship and strengthen trust.

Samples

Before you place a larger order, ask your foreign suppliers to send samples. If you have customers abroad, they might ask you to do the same thing. Sample shipments give buyers a sense of the delivery time and quality they can expect. It is up to the vendor to decide whether or not to send samples free of charge. Important factors to consider here are product type, value, and intended use.

Know your chain

Do you know what your foreign partners are doing in terms of sustainability? Since the introduction of the CSRD in 2024, large businesses must report on their sustainability efforts and those of their suppliers. Do you work with large businesses? Then make sure you know what your business partners are doing on sustainability.

Do you want to discuss with an adviser how to audit a foreign business partner? Then call the KVK Advice team: 088 585 22 22.

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