How to Verify a Counterparty Before a Market Transaction

Most bad deals do not announce themselves. They arrive as a polite email, a promising introduction, a supplier with a polished website and a price that is just slightly too good. By the time the invoice goes unpaid or the goods never ship, the paperwork usually shows that the warning signs were there from the beginning: a company that was never registered, a signatory with no authority to bind anyone, a bank account in a third party's name. Checking a counterparty is not suspicion. It is the ordinary hygiene of doing business, and it takes less time than most people assume.

Start With the Company Register, Not the Website

A website is marketing. A company register is a legal record, and the two are not the same thing. Begin with the register where the business is established. In Italy that means the Registro delle Imprese, accessed through a visura camerale — a company registration extract that you can order online for a small fee. For counterparties elsewhere, use the equivalent: Companies House in the UK, the Handelsregister in Germany, the Registre du commerce in France, or the state corporate registry in the US.

Order a current extract, not one the other side emailed you six months ago, and read it for five specific things:

• Legal name and legal form — the exact registered name, including the suffix (S.r.l., S.p.A., S.n.c., Ltd, GmbH).
• Registered office — a real address, and one that matches what appears on the contract and the invoice.
• Tax code and VAT number — check the digits against the invoice. A mismatch is not a clerical matter; it means you are looking at two different entities.
• Status — active, in liquidation, in voluntary arrangement, subject to insolvency proceedings. This single line has saved more companies than any contract clause.
• Directors and officers — the names you will compare against the person asking you to sign.

One more habit worth forming: check the VAT number independently rather than trusting the letterhead. In the EU, the VIES system confirms whether a VAT number is valid and to whom it belongs. If the number on the invoice belongs to a different company, stop and ask why before you do anything else.

Confirm That the Person Can Actually Sign

The company may be real, solvent and reputable. That says nothing about whether the person in front of you can commit it to anything. Directors generally have broad powers, but those powers may be limited in the articles of association, and much day-to-day signing is done by procuratori or other delegates acting within defined limits.

So ask, plainly: who signs, under what authority, and can you see the document that grants it? A procurement manager who signs "all our contracts" but cannot produce a delegation is a problem you want to discover now rather than during a dispute. Where the value is significant, request an extract of the resolution authorising the transaction, or a signed power of attorney.

Verify through a second channel

Contact details are easy to fake. If your entire relationship exists inside one email thread, you have no independent confirmation of anything. Take the phone number or the certified email (PEC) address from the company register, not from the signature block, and call to confirm the deal, the signatory and the payment details. It is a two-minute call. Business email compromise is common precisely because it works: a genuine supplier's mailbox is compromised, and the only visible change is an apologetic note about new bank coordinates.

Follow the Money Before You Send It

The name on the bank account should match the name on the contract. Where it does not, the gap needs a documented explanation — for example, a parent company collecting on behalf of a subsidiary, or a factoring arrangement. Get that explanation in writing, signed by someone with authority.

Treat any mid-deal request to change bank details as a stop signal until proven otherwise. Reconfirm it by phone using a number you already had. Never use the contact details supplied in the same message that asks for the change. Paying into a personal account, or into an account in a country unconnected to the counterparty, is a risk you rarely need to take. For larger transactions, an escrow arrangement or a letter of credit shifts the question from trust to mechanics, which is usually where it belongs.

Six Red Flags That Should Slow You Down

No single item below proves fraud. Each one, though, justifies a pause and one more question.

• Pressure to sign or pay the same day, often with a story about a deadline or a price that expires.
• Bank details changed by email, with an apology and an urgent tone.
• A website with no legal name, registered address, VAT number or company details anywhere on it.
• A refusal to provide a current registration extract, or a screenshot offered instead of a document.
• A contract in one company's name and an invoice in another's.
• Insistence on communicating only through messaging apps, or on routing payment through a third party.

A newly incorporated company chasing a large order is not automatically suspect — every business was new once. But newness plus urgency plus a request for an advance is a combination that deserves a longer look at the people behind it.

Read the Documents for What Is Missing

Amateur paperwork fails by omission rather than by error. Read the proposed contract for the clauses that are absent: no delivery terms, no payment schedule, no governing law, no dispute resolution mechanism, no identification of the contracting entity. Vague language about "the parties" and "the project" is not flexibility. It is a gap someone will fill later, probably not in your favour.

Keep the standard checks proportionate to the risk. A €2,000 order from a supplier you have used for years needs a glance at the register and a matching invoice. A first-time counterparty, a large advance, or a cross-border deal with unfamiliar entities justifies more: sanctions screening where relevant, a credit check, and a lawyer reading the contract before you sign it.

Keep a Record of What You Checked

Due diligence is only useful if you can show it happened. Keep the extract you ordered, dated, with a note of what you verified and who you spoke to. It is evidence if a dispute arises, and it is institutional memory when a colleague handles the next order. For ongoing suppliers, refresh the check once a year and whenever something changes: a new bank account, a new signatory, a new legal name, a restructuring.

On any transaction that is unusually large, cross-border, or in a regulated sector, take professional advice before committing. This is not a reason to delay a straightforward purchase; it is a reason to know which purchases are not straightforward.

A Ten-Minute Check Before You Commit

1. Order a current registration extract and confirm name, address, VAT number and status.
2. Match the contracting entity to the invoice and the bank account.
3. Identify the signatory and ask for the delegation or resolution that authorises them.
4. Call a number from the register — not from the email — to confirm the deal and the payment details.
5. Write down what you checked, when, and what you found.

Ten minutes of that, done before the first payment rather than after it, is the cheapest insurance available in commercial life. Most counterparties will pass without difficulty, and the ones who object to being checked have told you something useful.

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