Questions to ask a prospective trading partner.

A checklist for distributors and importers assessing a trading company: who you contract with, where goods come from, how orders work and how claims work.

Distributors usually compare trading offers on price. Price matters, but a workable trading relationship also depends on knowing who you are contracting with, where the goods come from, how each order will run and what happens when something goes wrong. The questions below help you compare offers on those points before you commit.

Who you are dealing with

Start with the basics. Ask for the company’s full legal name, its trade licence number and issuing authority, and its registered address. Check that the name on the licence matches the name on the quotation, the contract and the invoice, and that payments go to a bank account held in that same name. Ask who is authorised to sign for the company.

A trade licence can usually be checked with the authority that issued it. The check takes little time and confirms that the company exists and is licensed for the activity in question.

Where the products come from

Trading companies source in different ways. Some buy directly from producers or brand owners; others buy from authorised distributors or other wholesale channels. Each can be legitimate, but the source affects what you receive. Ask:

• Who is the producer, and where were the goods made?
• Are the goods intended for your market, with suitable labels and language?
• Does the product carry a warranty that will be honoured in your market?
• Can you have batch numbers, production dates or other traceability details?
• Are there restrictions on importing or reselling the brand in your market?

A brand logo on a website shows that a company has traded that brand. It does not mean the company is the brand’s authorised or exclusive distributor. If authorisation matters to you or to your customers, ask for it specifically and in writing.

Compare the goods and the responsibilities, as well as the price.

How an order will work

Before the first order, agree in writing:

• the Incoterms rule and the named place, which decide where risk and cost pass to you;
• the payment terms and method, for example payment in advance, a letter of credit, a documentary collection or open account;
• the documents the seller will provide with each shipment;
• who arranges freight, insurance and customs clearance at each end;
• when the goods count as ready, and how the shipping date is confirmed;
• whether you can inspect the goods, or appoint an inspector, before they ship.

When something goes wrong

The terms for problems matter as much as the terms for a smooth order. Ask how a shortage, damage, a wrong product or a quality concern should be reported, the time limit for reporting it and the evidence required. Ask what remedies are available, such as replacement, a credit note or a refund, and who pays for return freight. Check the force majeure terms, the governing law and how disputes will be resolved.

Compliance and conduct

Ask how the company checks the parties in a transaction against sanctions and export controls, what its position is on bribery and facilitation payments, and how it handles the business and personal information you share. A company that has thought about these questions will answer them directly.

Signs of a workable relationship

Clear written answers, realistic lead times, offers that state what is and is not included, and a willingness to say when a product cannot be supplied to a market are all good signs. Vague answers about origin, pressure to pay to a different company or account, and reluctance to put terms in writing are reasons to slow down.

These are fair questions to ask DMS as well. Send your enquiry with the products, quantities and destination you have in mind, and ask us anything above that matters to your business.