A wrong vendor can delay deliveries, hurt quality and even create tax problems. A short, structured due diligence before onboarding a new supplier protects small businesses from most of these risks.
1. Identity and registrations
- Verify the GSTIN on the GST portal: legal name, status and filing history
- Check PAN and that the bank account is in the same business name
- Collect Udyam registration if the vendor is an MSME — this matters for payment timelines
- For companies and LLPs, check basic details on the MCA portal
2. GST compliance
Your input tax credit depends on the supplier filing returns and paying tax. Prefer vendors who file regularly and check their filing status periodically.
3. Capacity and quality
- Visit the facility or ask for photos and videos
- Ask for samples and test reports
- Check certifications that are relevant to your product
- Understand lead times and backup capacity
4. Financial stability and references
Ask for two or three customer references and speak to them. For large orders, review basic financial statements or a credit report.
5. Contract essentials
- Specifications, quantities and delivery schedule
- Price, taxes, payment terms and penalties for delay
- Quality acceptance, rejection and replacement process
- Confidentiality and dispute resolution
6. Review regularly
Due diligence is not a one-time task. Review key vendors every year on delivery, quality and compliance.
Get support
ATTPL Legal can draft and review vendor contracts, and ATTPL Consultancy supports GST and compliance. Contact ATTPL Group for help.
