An advance payment can secure stock, a production slot or a service, but it also exposes the buyer to loss if the counterparty is misidentified, unable to perform or operating on false information. Before transferring funds, verify who you are dealing with, what the payment covers and what evidence will show that the agreed step has been completed.

Confirm the counterparty’s identity and authority

Match the contract, invoice, commercial registration details and payment account to the same legal person. Check the entity’s current name, registration number, address and status through reliable records available for its jurisdiction. If an individual signs, confirm that person’s authority to bind the company. Be cautious when a last-minute request changes the beneficiary account or asks for payment to an unrelated person.

Check capacity and the proposed transaction

Ask for evidence that the supplier can provide the goods or services: relevant licences where required, premises or equipment, references, samples, delivery plans and the identity of subcontractors. The evidence should fit the scale and timing of the order. For a new or high-value relationship, conduct proportionate checks on ownership, reputation and litigation or insolvency indicators using appropriate sources.

Make the advance conditional and traceable

The agreement should state the amount, currency, due date, purpose and whether the payment is refundable or credited against later invoices. Tie payment to a verifiable event, such as an approved purchase order, production milestone, shipping document or inspection. For material advances, consider staged payments, an escrow arrangement, a suitable guarantee or another security that can actually be used if performance fails.

Pay only to an account verified through a known contact channel. Confirm any change of bank details using a previously established phone number, not the number in the change request. Keep the signed contract, invoice, approvals, bank confirmation and proof of transfer together.

Keep the contract workable if things change

Set delivery specifications, acceptance and inspection procedures, deadlines, notice of delay, cancellation rights, refund obligations and dispute resolution. Describe what happens if goods are rejected or only part of an order is delivered. Avoid relying on broad promises that do not identify a measurable result or a responsible person.

Warning signs that call for a pause

• Pressure to pay immediately without a signed agreement or clear invoice.
• Inconsistent company names, addresses, signatures or account beneficiaries.
• Refusal to provide basic registration or capacity documents.
• Unexplained changes to payment instructions or unusually large advances.
• Promises that cannot be checked against a delivery schedule or evidence.

A warning sign is a reason to verify, not by itself proof of fraud. Pause the transfer, independently confirm the facts, and document the result. If fraud is suspected after payment, preserve messages and transfer records and promptly contact the bank and appropriate authorities.

Before sending the money

Confirm the legal identity and signing authority; reconcile the contract, invoice and beneficiary account; verify the supplier’s ability to perform; tie the advance to a documented milestone; and retain an audit trail. The right checks depend on the transaction, amount and applicable law.

This article is general information, not legal advice. Obtain transaction-specific advice where the amount, risk or cross-border structure warrants it.