Are You New to Exporting? Here is How to Vet a Foreign Partner, Agent or Distributor and Make Sure the Company Can Pay Its Bills!

Are you proactively planning your expansion or are you reacting to a business opportunity? If you are reacting to a business opportunity, here is what I suggest you do. Start with doing diligence on your buyer/potential agent or distributor. To me this means:

  1. Screening the party against the government lists for parties with whom you can’t do business;
  2.  Provide the party with an anti-corruption questionnaire and certification; and
  3.  Ensure the company can pay you! One cost effective way to do this is using the U.S. Commercial Service’s International Company Profile. This is a great services. The only concern is you must let the company know you are doing the investigation because company executives will be interviewed.  You will get a report that includes:
  • A detailed credit report on your prospective foreign partner;
  • A listing of the company’s key officers and senior management;
  • Banking and other financial information about the company;
  • Market information, including sales and profit figures, and potential liabilities;
  • An opinion as to the reliability of the overseas partner; and
  • An opinion on the relative strength of that company’s industry sector in your target market.

The cost is lowered to $350 for new exporters using the service for the first time. The regular price ranges from $600-$900 depending on the size of the foreign company and takes about 20 business days to complete.

Then you are ready for a draft contract or more diligence on the party if the first round of vetting resulted in significant red flags.