Due diligence
How to Verify an Electronics Supplier: A 7-Step Due Diligence Checklist
Most supplier fraud is not hidden. It sits in the gap between a convincing website and a company that does not exist. This is the checklist we run before any company is listed in our network — and the one you should run yourself.
Supplier fraud in electronics does not look like movie hacking. It looks like a well-designed website, a VAT number that turns out to belong to a different company, and a first order of fifty laptops that never arrives. By the time a buyer notices, the money has usually moved and the trading name has changed.
The uncomfortable truth is that most of the checks that would prevent this take minutes, not weeks. They just rarely get done, because procurement is busy and the pressure to find stock at a good price is constant. This is the sequence we run ourselves, in order.
Why supplier fraud is rising
Three things have changed. First, the barrier to building a credible-looking company website has collapsed — a supplier identity can be manufactured in an afternoon. Second, trade finance and payment fraud have professionalised. Third, the volume of cross-border electronics trade has grown faster than the institutions that police it.
None of this makes fraud more likely than it was. It makes convincing fraud more likely, which is harder to catch with a glance. A domain registered last month, a company number that does not match the name on the invoice, and a warehouse address that turns out to be a Royal Mail office: each of these is a five-minute check.
The 7-step checklist
Run these in order. Each step assumes the previous one passed, because a failure early on makes the later checks meaningless — there is no point confirming the warehouse of a company that does not legally exist.
1. Legal identity
Confirm the company is real before anything else. Search the company number on Companies House. The number must match the legal name on the quotation and invoice, the registered office must be a real physical address, and the filing history must show active accounts.
Check the incorporation date. A company registered six weeks ago claiming twenty years of trading history is telling you something. Check the directors: if the sole director is a nominee service with no other filings, treat that as a flag rather than a fact.
Then verify the VAT number against HMRC's published records. A valid VAT number that belongs to a different company is one of the most common patterns we see, and it is trivial to rule out.
2. Trading history
Ask how long they have traded and with whom. References are the point here: a supplier who has supplied UK businesses for five years can name three buyers who will take a call.
Where a supplier shows no trading history, that is not automatically disqualifying for a first order, but it does change the size of the order you should place and the payment terms you accept. See step 5.
3. Product authorisation
For UK-market electrical and electronic equipment, the relevant regimes are CE and UKCA marking and — depending on the product — WEEE registration, RoHS and battery compliance. Ask for the declaration of conformity and the supporting test reports.
Legitimate wholesalers have these on file and send them without being chased. A supplier who cannot produce them for consumer electronics is telling you something about their supply chain, whether or not the goods themselves are counterfeit.
Note
CE marking is accepted in Great Britain for many product categories indefinitely. Northern Ireland continues to follow EU rules with a CE or UKNI mark. If you ship into NI, check the position separately.
4. Warehouse capacity
Ask for the warehouse address and check it exists. Look it up on a map. Then ask a simple question: can you ship twenty units today?
The answers should be consistent. A company claiming forty thousand square feet of inventory that cannot say who their carrier is, or which days they dispatch, has a stockholding problem. Stock photographs on a website prove nothing; a facility that can describe its pick-and-pack process can usually ship.
5. Payment terms and credit
This is where buyers routinely give away their leverage. Established UK wholesalers typically offer net 14 to net 30 day terms. A new supplier asking for payment upfront in full is telling you where they sit in the risk hierarchy.
For a first order, the sensible position is: small value, insured or tracked shipping, and a method of payment with some recourse. Card and bank transfer both carry risk; verified business account transfers are a little worse. Never send funds by Western Union, MoneyGram or any method that cannot be reversed.
| Situation | Reasonable terms |
|---|---|
| Established supplier, 5+ years trading | Net 30, goods insured in transit |
| Known supplier, shorter history | Net 14, or 30% deposit |
| New supplier, no references | Procure order only, tracked delivery |
| Any supplier, high value | Escrow or staged payment on arrival |
6. References and complaints
Ask for three references from UK businesses they have supplied in the last twelve months, and actually call them. Ask specific questions: what did they order, did it arrive on time, what happened when something was faulty.
Search the company name alongside terms like scam, complaint and Trading Standards. Absence of complaints is mildly positive; an unresolved pattern is decisive.
7. The trial order
Do not skip this because the supplier is persuasive. Place one small order that will not damage your business if it fails — a dozen units rather than a thousand — and treat it as a paid test. Confirm the total landed cost, not just the unit price: shipping, duty, and the time your finance director has to fund it all belong in the calculation.
Only scale the relationship once the first order has arrived intact and the paperwork has checked out.
Warning
If a supplier changes bank details after a quotation is issued, treat it as a compromise until you verify by phone using a number you looked up independently. Invoice redirection fraud is one of the most common attacks on established buyers.
Red flags checklist
- A company number that does not match the legal name, or a VAT number belonging to someone else.
- Incorporated recently, but claiming a long trading history.
- Prices significantly below every other supplier in the market.
- Reluctance to provide references, or references who have never heard of the company.
- Bank account in a different name, or a different country, from the company quoted.
- No declaration of conformity for electrical products.
- Pressure to pay by an irreversible method before any relationship exists.
- Written communication that contradicts what was agreed verbally.
Any one of these is survivable. Several together should end the conversation — and tell us, so we can add the pattern to our records.
Key takeaways
- Verify legal identity on Companies House and HMRC before anything else — it takes minutes.
- References are only useful if you actually call them and ask specific questions.
- Match the size of your first order and the payment terms to how much history the supplier has.
- Bank detail changes mid-quotation are a compromise signal until verified by phone.
Frequently asked questions
Identity checks against Companies House and HMRC take minutes. Reference calls and warehouse assessment take one to two working days. A full review including commercial standing normally completes within four working days, which is the review window we apply to membership applications.
No. A mark or declaration of conformity is a manufacturer or importer claim about compliance, not independent testing. It is a necessary check rather than a sufficient one, and counterfeiters reproduce marks without difficulty. Treat it as one signal among several, alongside the supply chain and authorisation questions.
No. Payment in full before any relationship exists transfers all of the risk to you with no recourse. Use procurement order, staged payment, or an escrow arrangement for higher-value first orders. Genuine wholesalers understand why you are asking, and established ones have terms to offer instead.
It removes work rather than risk. Verification means someone else has already run these checks, and the documentation held against each deal means a dispute can be settled from a record instead of from memory. You remain responsible for your own due diligence on any individual counterparty.
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