How to check a supplier before making your first advance payment

Before making your first advance payment, check exactly who is selling the goods, whether the signatory is authorised to enter into the contract, who owns the account and whether any restrictions apply to the transaction. Compare the registration details with the contract, invoice and payment recipient information. Separately agree on the contents of the shipment, delivery deadline, documents, acceptance and the procedure for refunding the advance.

Registry information helps assess risk, but does not guarantee delivery. For a first purchase, consider limiting the advance amount, ordering a trial batch and tying the next payment to an agreed outcome. Keep dated records of your checks and documents showing actual performance of the order.

Start with the details of the contracting party

Ask the supplier for the full legal name of the legal entity and its EDRPOU code. For an individual entrepreneur (FOP), you need their surname, first name, patronymic if applicable, and tax identifier. For a person entitled to make payments using passport details, use the relevant identifier. The name of a store, website or trademark may differ from the seller’s legal name.

Before approving payment, obtain:

• registration details for the supplier;
• a draft contract and specification, or another document listing the agreed goods;
• the signatory’s details and the basis for their authority;
• an invoice showing the recipient’s name and IBAN;
• tax status information, if it affects the purchase;
• the dispatch address, contact details for the responsible employee and a list of documents for the shipment.

Compare the parties by their identifiers. Identical or similar names may belong to different persons. If an intermediary is handling negotiations, establish who will be the seller, who will sign the documents and who will be responsible for delivery.

What to check in the EDR

The Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organisations contains information used to identify a counterparty. Articles 9–11 of Law No. 755-IV define the information held, its legal status and the ways to obtain it.

Under Article 11 of Law No. 755-IV, EDR information is public, except for individuals’ tax numbers and passport details. The law provides for different methods of access, including extracts, and in some cases a fee. Do not assume that all required information is always available without authentication. If needed, obtain an extract through an available official service. Paper and electronic extracts have equal legal force.

Information entered in the EDR may be used in a dispute with a third party. However, Article 10 does not allow a person to rely on inaccurate information as accurate if they knew or could have known it was inaccurate. If an extract contradicts the supplier’s documents, find out why before making payment.

Exceptions for beneficial owners and information during martial law

The requirement to submit information about the ultimate beneficial owner and ownership structure has statutory exceptions. Article 9 of Law No. 755-IV expressly refers to the list of legal entities in Part Eight of Article 5-1 of the law on preventing and combating money laundering. The EDR may also state a substantiated reason why there is no beneficial owner. A beneficial owner check for a legal entity does not apply to an FOP.

Therefore, the absence of a beneficial owner’s name does not by itself prove a violation. Ask for an explanation and assess whether it is consistent with the counterparty’s legal form and status. A separate exception in Article 10 concerns the use of beneficial-owner information in financial-monitoring relationships: the general Article 10 rules on the accuracy of EDR information do not apply to it.

Section VII of Law No. 755-IV sets out special rules for address information for the defence-sector legal entities it specifies, during martial law and for one year after its termination or cancellation. If the supplier belongs to this category, separately agree on an available contact channel, an address for documents and the shipping location. A registered address does not confirm where the goods are actually located.

Check the signatory’s authority

Under Articles 92 and 207 of the Civil Code, a legal entity acts through its authorised bodies or persons. The authority to sign a contract may arise from the entity’s founding documents, a power of attorney or the law. An employee who agrees on a price or sends an invoice is not necessarily authorised to enter into a contract.

• The director signs the contract. Compare their details with the EDR. Check any available restrictions and the provisions of the founding document relevant to this agreement. If approval from another body is required, ask for a document confirming it.
• A representative signs the contract. Obtain a document confirming their authority. Check who issued it, what actions it authorises and whether it covers the purchase in question. For a power of attorney, check its date: under Part Three of Article 247 of the Civil Code, a power of attorney without a date of execution is void. If a term is specified, check that it has not expired; if no term is specified, the power of attorney remains valid until it is terminated.
• The supplier is an FOP. Check that the contract is signed by the entrepreneur or a duly authorised representative.

Article 248 of the Civil Code provides for the termination of representation, including on expiry or revocation of a power of attorney. Having a copy does not confirm that the authority is still in force. If in doubt, contact the person who issued the document directly.

Article 92 sets a special rule for restrictions on representation in relations with third parties. Such restrictions may matter if the legal entity proves that the counterparty knew or, in all the circumstances, could not have been unaware of them. Take any restrictions you find into account when documenting the transaction.

Check tax status and VAT terms

Use the official STS registers. For a VAT purchase, check that the supplier is registered as a VAT payer. If the supplier says it uses the simplified tax system, verify the information in the register of single tax payers. The tax status and relevant dates must be consistent with the transaction documents.

Single tax payer status does not automatically confirm VAT payer status. At the same time, buying from a supplier that is not a VAT payer is not in itself a sign of unreliability. Clearly state in the contract and invoice whether the price includes VAT, and give your accountant the seller’s actual tax status.

For a buyer registered as a VAT payer, registration of the tax invoice in the ERPN is important. Under Clause 201.7 of the Tax Code, an invoice must also be issued for an advance payment. Only persons registered as VAT payers may charge VAT and issue tax invoices.

Before paying, agree on the buyer’s correct details, the goods nomenclature and how the parties will act if the invoice contains an error or its registration is suspended. The accountant should monitor the applicable registration deadline and obtain the invoice from the ERPN. For an ordinary goods purchase, an invoice for payment and a payment document do not replace a registered tax invoice as the basis for a tax credit.

Clause 198.6 of the Tax Code also provides for other valid supporting documents: customs declarations and the documents listed in Clause 201.11. In particular, a value limit applies to cash register receipts specified in that clause: UAH 200 per day for goods or services received, excluding VAT. This exception does not cover an ordinary substantial advance payment for a shipment of goods.

If registration of the invoice is suspended, obtain the relevant receipt and agree on next steps with the supplier. A complaint under Clause 201.10 does not replace a document required for a tax credit. A supplier’s tax debt by itself does not prove fraud and is not an automatic ground for denying the buyer a tax credit. Assess the documents and actual circumstances of the specific transaction.

Assess court cases and bankruptcy

On the “Case Status” page, check whether the counterparty is involved in court cases. Through the official “Judiciary of Ukraine” portal, go to the Unified State Register of Court Decisions and bankruptcy announcements.

Assess the subject of each case, the supplier’s role and the outcome. A company may be recovering debts from buyers, challenging a government body’s decision or facing a claim for undelivered goods. These situations have different implications for a new advance payment.

• Compare the name and available identifying details with those of your supplier.
• Find out the subject of the dispute, the amount claimed and the current stage.
• Distinguish claims made in a lawsuit from facts established by the court.
• Check whether the decision has entered into force and whether there are later decisions in the case.
• If there is bankruptcy, insolvency or termination, obtain a legal assessment of whether a new contract can be entered into and performed.

The number of cases is not a ready-made measure of reliability. The absence of search results does not confirm that there are no disputes at all: access to documents may be restricted and information about parties may be anonymised.

Check sanctions and specific restrictions

Check the supplier in the National Security and Defence Council State Register of Sanctions. For a legal entity, also assess available information about its owners and ultimate control. A matching name or surname must be checked against identifiers.

For a matching record, identify the person, the type and duration of the sanction, and the decision that put it into effect. Law No. 1644-VII provides for different measures: blocking assets, restricting trade transactions, suspending the performance of economic and financial obligations, and terminating or suspending permits. Their effects on a purchase differ.

For personal sanctions, an NSDC decision is put into effect by a Presidential decree. For the sectoral sanctions specified by law, approval by the Verkhovna Rada is also required. Under Article 5, decisions in force are binding. If you find a sanction that may cover the payment or delivery, suspend approval of the advance until its scope has been legally assessed.

Part Four of Article 4 provides exceptions for paying taxes, fees and the unified social contribution, and for specified actions to repay the relevant debt. These exceptions do not provide general permission to transfer a commercial advance to a sanctioned supplier.

Confirm the goods, contacts and payment recipient

Contact the supplier through a contact channel verified independently. Find out where the shipment is, who will dispatch it, when it will be ready and whether you can inspect the goods or receive a sample. For a first order, agree on photos of the specific shipment, a video call from the warehouse or an in-person inspection, depending on the value and type of goods.

Compare the recipient’s name and identifier in the payment details with the contracting party. Ask for a document showing the supplier’s bank details. A correctly formatted IBAN by itself does not confirm who owns the account.

If you are asked to pay another person, obtain documents explaining the legal basis and consequences of that payment. Agree on this in the contract or another appropriate document. A change of account sent in a manager’s message must be separately confirmed through a previously verified contact channel.

What to agree in the contract before making an advance payment

Article 207 of the Civil Code allows the terms of a transaction to be recorded in one or more documents, including electronic documents. For a first purchase with an advance, it is advisable to prepare a signed contract and specification so that both parties have access to all the terms.

• Goods: name, item number, quantity, units of measure, configuration and agreed specifications.
• Price: unit and shipment price, whether VAT applies, and delivery costs.
• Payment: advance amount, payment deadline, confirmation of receipt and the condition for paying the balance.
• Delivery: specific deadline, address, delivery method, the party arranging transport and the agreed point at which the risk of damage or loss passes.
• Documents: goods transfer documents, transport documents if needed, a tax invoice for the relevant transaction and proper documents for the goods.
• Acceptance: how quantity, quality and completeness will be checked, deadlines for reporting discrepancies and how they will be documented.
• Discrepancies: the procedure for replacement, completing the shipment, returning goods, paying for return delivery and refunding money.
• Non-delivery: notification procedure, agreed deadline for refunding the advance and the parties’ liability.
• Exceptional circumstances: notification procedure, evidence of the effect on performance, changes to deadlines and how a prolonged inability to deliver will be resolved.

For goods requiring special permits or documents, check whether they apply to the specific activity, goods and place of operation. Confirm their validity and whether they have been suspended or terminated. The list of documents depends on the product range and should be agreed before purchase.

Martial law, power outages or transport problems may affect delivery. Set out how the supplier must notify you of a specific obstacle and what documents they must provide. Do not agree to an unconditional release from all obligations merely because war or force majeure is mentioned.

Example of payment in instalments

Illustrative example: a store orders 10 units of goods at UAH 1,000 each. The agreed total is UAH 10,000. A 30% advance is UAH 3,000, leaving UAH 7,000. The contract may provide that the balance is paid after acceptance of the whole shipment and receipt of specified documents. If the supplier agrees to a different sequence, describe precisely the outcome that triggers the payment obligation.

Document acceptance and keep records

An invoice states the amount due, while a payment document confirms the transfer. To confirm receipt of goods, prepare the relevant transfer document and keep evidence of actual acceptance. If there are discrepancies, prepare a document listing shortages, damage or non-conformities, attach photos and send notice using the method agreed in the contract.

Clause 44.1 of the Tax Code requires tax accounting figures to be supported by proper documents. Supplier check results supplement the purchase records but do not replace the source documents for the transaction.

Create a separate supplier folder and keep:

• an EDR extract or other information obtained, with the request date;
• the results of checks in tax registers and the sanctions register;
• court documents that affected the purchasing decision;
• documents confirming the signatory’s authority;
• the contract, specification, invoice and confirmed payment details;
• correspondence about order terms and changes to payment details;
• payment, source and transport documents;
• the tax invoice and proof of its registration, if required;
• acceptance documents, claims and supplier responses.

Different minimum retention periods apply to documents and information covered by Clause 44.3 of the Tax Code. For the primary and other tax documents specified in that clause for legal entities, including legal entities using the simplified system, the period is 1,825 days. For other documents not subject to longer periods, it is 1,095 days. A period of 2,555 days applies to certain tax control categories.

The period is calculated under Clause 44.3, primarily from the submission of the tax return for which the documents were used, or from the deadline for filing it. It may be extended in cases specified by law. Keep documents related to an audit or dispute until the relevant procedures are complete and for no less than the applicable minimum. Do not delete records simply because delivery has been completed.

Working procedure for a first purchase

1. The buyer gathers the payment details, delivery terms, information about the shipment and draft documents.
2. The owner or an authorised employee checks the EDR, authority, sanctions and material court cases.
3. The accountant verifies tax status, price, VAT and accounting documents.
4. The person responsible for the contract agrees on deadlines, acceptance, instalment payments and refunding the advance.
5. The employee preparing the payment rechecks the contracting party, recipient, IBAN, amount and payment reference.
6. The employee accepting the goods checks the shipment, documents receipt and records discrepancies.
7. The accountant and buyer check that delivery is complete, the documents are complete and the basis for final settlement is in place.

Pause payment if identifiers do not match, authority has not been confirmed, the recipient of funds is unclear or a prohibition may apply to the transaction. For risks that can be explained, agree on a smaller trial shipment or a different payment arrangement. Repeat the relevant checks before a new substantial advance or a change of signatory or account.

Official sources

• Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Organisations” No. 755-IV: Article 9, including Part Two, items 9, 9-1, 13, 26, 28, 45, 46 and Part Four; Articles 10 and 11; Section VII.
• Civil Code of Ukraine No. 435-IV: Articles 92, 207, 237, 244, 247 and 248—representation, authority, the date and term of a power of attorney, and written form of a transaction.
• Tax Code of Ukraine No. 2755-VI: Clauses 44.1, 44.3, 44.4; Clauses 198.2 and 198.6; Clauses 201.1, 201.7–201.12 and 201.16—documents, tax credit and tax invoices.
• Law of Ukraine “On Sanctions” No. 1644-VII: Article 4, including Parts One and Four; Article 5, including Parts Two, Three, Five–Seven—types of sanctions, exceptions, validity, duration, amendment and cancellation.
• State Tax Service of Ukraine: official registers—checking counterparties’ tax status.
• Judiciary of Ukraine: “Case Status”—searching for information about court cases.
• Official “Judiciary of Ukraine” portal—access to the Unified State Register of Court Decisions and bankruptcy announcements.