Before purchasing equipment abroad, a Ukrainian company should check the seller, its financial condition, address, owners and ability to fulfil the contract.
The purchase of industrial equipment abroad often requires a substantial advance payment. Depending on the terms of the contract, a Ukrainian buyer may transfer 30–70% of the price to the supplier before the equipment is manufactured or shipped.
The larger the advance payment, the more important it is to make sure that the foreign company actually exists, has the stated specialisation, production capabilities and experience in fulfilling similar contracts.
A professional website, presentation, photographs of the equipment and active correspondence are not sufficient proof. Fraudsters may use other people’s images, create companies with similar names or send invoices containing the bank details of a third party.
Before concluding a contract, it is advisable to check the seller’s exact legal name, registration number, address, date of incorporation, status, executives, owners, corporate affiliations, financial indicators and payment history.
D&B’s Business ID Report and Business Information Report may contain registration details, information about operations, corporate structure, financial indicators, credit ratings, payment behaviour and legally significant events.
“The more attractive the offer and the larger the advance payment, the more thorough the seller’s verification should be. Photographs of the equipment, a website and a corporate presentation do not confirm that the company has the necessary assets, experience and ability to fulfil the contract,” said Maksym Urakin, Director of Development and Marketing at Interfax-Ukraine, Head of the D&B–Interfax-Ukraine business unit and PhD in Economics.
The bank details should be separately cross-checked against the legal entity specified in the contract. A change of bank account immediately before payment, a request to transfer money to another company or the use of a bank in a third country requires an additional explanation.
The risk can be reduced through staged payments, a documentary letter of credit, a bank guarantee, insurance, an independent inspection of the production facility or an inspection of the equipment before shipment.
If the seller is an intermediary, the buyer should understand who directly manufactures the equipment, who is responsible for the warranty and who will bear the obligations in the event of a delay or technical defect.
Verification is also necessary after the contract has been signed, especially if manufacturing takes several months. A deterioration in financial condition, a change of ownership or the cessation of operations may affect the fulfilment of the order.
Dun & Bradstreet has operated in the field of business information and risk assessment since 1841. The company provides international business reports and data on companies’ payment behaviour, corporate affiliations, creditworthiness and ownership structures.
Interfax-Ukraine is D&B’s official representative in Ukraine. The agency’s specialised unit helps Ukrainian companies order checks on foreign manufacturers, sellers and suppliers. Interfax-Ukraine has operated since 1992 and is an independent Ukrainian news agency.
For enquiries, please visit D&B’s specialised website at dnb.ua, email Urakin@interfax.kyiv.ua or call +38 (044) 270-65-74.
