5 Things to Check Before Paying Any Supplier
A practical checklist for any business. You don’t need a procurement team — but you do need to spend five minutes on these basics before handing over money.
Bundle IQ·December 2024·4 min read
A practical checklist for any business. You don’t need a procurement team — but you do need to spend five minutes on these basics before handing over money.
Every year, UK businesses lose billions of pounds to suppliers who disappear, underdeliver, or simply weren’t who they claimed to be. Most of this loss is preventable with five minutes of basic due diligence that the vast majority of SMEs never do.
This isn’t about paranoia. Most suppliers are legitimate and want to do a good job. But the consequences of getting it wrong — especially for a sole trader or small business — can be devastating. A £15,000 kitchen renovation gone wrong is not a recoverable loss for most households. A six-month IT contract with a supplier who goes under halfway through can genuinely threaten a business.
Here are five checks that take minutes and can save you a fortune.
If a supplier is trading as a limited company, they must be registered at Companies House. Go to find-and-update.company-information.service.gov.uk and search their company name. Check:
If they’re a sole trader, ask for a UTR (Unique Taxpayer Reference) or proof of HMRC self-assessment registration. Takes 30 seconds.
Red flag: A supplier who resists or delays providing company registration details. Legitimate businesses are proud of their trading history. Reluctance is a signal worth taking seriously.
For any service that involves people on your premises, or any service where something going wrong could cost you money, public liability insurance (PLI) is essential. Professional indemnity (PI) is also important for knowledge-based services like legal, financial, IT, or consultancy work.
Ask for the insurance certificate (not just confirmation they have it). Check the coverage level matches the value of what you’re asking them to do. A PLI policy with £500k coverage is inadequate for a supplier doing building work on a £2M commercial premises.
Trustpilot, Checkatrade, Clutch (for agencies), or sector-specific platforms. Don’t rely on testimonials on their own website — those are curated. Look for patterns in independent reviews. One bad review means little. Five bad reviews saying the same thing about non-delivery means everything.
For significant contracts, ask for references from previous clients in a similar sector or of a similar size to you. A supplier who has only ever worked with sole traders isn’t necessarily the right fit for a 200-person company, even if the category is the same.
This is the single biggest risk management step available to any buyer. Once money has changed hands, your leverage is gone. Use a milestone payment structure: a reasonable deposit (no more than 20–30%), then staged payments tied to defined deliverables, with the final payment on satisfactory completion.
The psychology: A supplier who insists on full payment upfront is either in financial difficulty (and may not complete the work) or is not confident enough in their delivery to accept milestone terms. Either way, it’s a warning sign.
Verbal agreements are unenforceable and the source of most procurement disputes. Before any money moves, you need a written document that clearly states: what will be delivered, by when, to what standard, and what happens if it isn’t. This doesn’t need to be a lengthy legal document — a clear email confirmation with the key terms is better than nothing.
Bundle IQ generates this automatically as part of every transaction. The scope is locked in at the point of contract execution, the acceptance criteria are written in, and both parties sign digitally. If there’s a dispute later, there’s no ambiguity about what was agreed.
Company registration, insurance, director ID, and references — all checked before any supplier joins the network. You don’t need to do this yourself.
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