What Compliance Checks Come Before the First Deposit?

A deposit is the moment a sourcing decision becomes a financial exposure, and it is the moment at which most buyers stop asking questions. The psychology is understandable — the negotiation is over, the decision has been made, and continuing to check feels like distrust. It is not. Everything checked before the deposit is quick to verify and expensive to discover afterwards, and the checks take an hour.

This piece covers six of them in the order they should be run. None is exotic and none requires a specialist. Two of them — the entity check and the bank detail check — exist because payment fraud in cross-border trade is a routine risk rather than a rare one, and the standard defences against it are procedural rather than technical.

What Is the Deposit Actually Buying?

Two things, and knowing which is which matters. It buys a production slot: a place in a schedule, with materials ordered and capacity set aside against the buyer order. And it buys the start of the work: the sampling cycle that precedes bulk. Where a buyer believes a deposit buys only the second, an argument about whether the slot existed becomes an argument about whether the money was spent.

Say which it is in the order document. A sentence stating that the deposit secures a production slot with named dates, and that the sampling cycle starts from a signed-off tech pack, removes an entire category of dispute. Where that sentence is absent, both sides will have a different and equally sincere understanding of what the payment achieved.

Which Documents Should Be in Hand Before Money Moves?

Six. The quotation with its validity date. The pro forma invoice. The signed-off specification or tech pack. The bank details on the entity letterhead. The entity registration or an equivalent official record. And, where the programme needs it, the current audit position. None of those is unusual to ask for and all six are normally available within a day.

The one most often missing is the signed-off specification, and it is the one that causes the most damage. A deposit paid against a specification that exists only as a conversation means the sampling clock has not started, the bulk clock cannot start, and the buyer has paid for a slot that may not be held. Where a specification cannot be signed off in time, the right move is to delay the deposit rather than to pay against an incomplete document.

A word on why these checks are worth the hour. The losses they prevent are not marginal: a payment sent to the wrong account is usually unrecoverable, and a paid-for slot that was never held produces a schedule failure that no amount of escalation can repair, because the capacity has gone. Both outcomes are rare, both are severe, and both are prevented by a procedure that takes less time than the negotiation that preceded it.

How Do You Confirm the Bank Details Are Genuine?

Three steps, and the third is the one that catches the fraud. First, the account name on the pro forma must match the legal entity name exactly — not approximately, and not a trading style. Second, the details should arrive on the entity letterhead or from a domain that matches the entity, not from a free mail address. Third, and most importantly, any change to bank details communicated before payment must be confirmed through a second, previously established channel.

That third step is the entire defence against the common pattern, which is a message sent close to the payment date instructing a change of account. It works because the buyer is busy and the message looks routine. A rule agreed in advance — bank detail changes are only accepted after a voice or video confirmation with a previously known contact — costs five minutes and defeats the pattern completely.

What Should the Pro Forma Invoice Say?

Enough to be matched against the quotation without interpretation: the legal entity name, the buyer entity name, a date and a reference, the description and quantity, the unit price and total, the Incoterm and named port, the payment terms, the bank details, and the specification or tech pack reference. Where any of those differs from the quotation, the difference should be resolved before payment rather than after.

The Incoterm and port deserve a specific look, because they determine where cost and risk transfer and they are the field most often quietly changed between quotation and pro forma. On this programme the quotation is FOB Xiamen under the current Incoterms rules, with CIF and DDP available on request. A pro forma showing a different term or a different port is not a small discrepancy; it changes the landed cost and the responsibility for the goods.

What Specification Has to Be Signed Off First?

The one that will be built, with a version number and a date, acknowledged in writing by both sides. A specification acknowledged verbally, or acknowledged by a sales contact without technical review, is not signed off. Where the buyer side has a technical owner, that person acknowledges it; where it does not, the buyer acknowledges it personally and accepts the consequences.

The sign-off also starts the sampling clock, which is the practical reason to get it right. On this programme sampling runs 6-10 working days from a signed-off tech pack and bulk production runs 35-50 days from written sample approval. Both clocks start from a document. Without the document, neither clock has started and any date discussed is a guess.

How Do You Confirm the Production Slot Exists?

Ask for the dates, not for an assurance. A production slot is a specific interval in a schedule: a start date and a goods-ready date, with the sampling cycle positioned before it. A production partner with a plan can state those dates; one without a plan can only say the order will be scheduled. The difference between the two answers is the difference between a booked slot and a queue position.

Then check that the slot is compatible with the quoted window. Where a quoted window is 35-50 days from sample approval but the slot offered starts in two months, the window and the slot are describing different things, and the buyer should reconcile them before paying rather than discovering the reconciliation later. A slot offered as a range is normal; a slot that cannot be described at all is not.

What Should Be Agreed About Inspection and Release?

Three things before the deposit: the standard and level, who books and pays for the inspection, and what event releases the goods. On this programme inspection sits at AQL 2.5 under ISO 2859-1 General Inspection Level II, with the class list agreed alongside. The release event matters as much as the standard: goods released on a passed inspection are a different proposition from goods released on a bill of lading.

The second of the three — who pays — is a negotiation rather than a formality, and it should be settled in writing. Where the buyer pays, the buyer controls the booking and receives the report directly. Where the production partner pays, the buyer should still receive the report with defect counts by class rather than a pass verdict, and that entitlement should be stated in the order.

What Happens If the Programme Is Cancelled After the Deposit?

Whatever the order document says, which is why it should say something. The usual and reasonable position is that the deposit covers work already done and materials already committed: the sampling carried out, the fabric ordered, the tooling started. Where a programme is cancelled before any of those, a partial return is a normal outcome; where it is cancelled after materials have been cut to order, it is not.

Say it before the deposit rather than negotiating it at cancellation, because a cancellation conversation is the worst possible moment to agree a commercial position. One sentence covering what the deposit covers and what happens on cancellation prevents an argument at exactly the moment both sides are least inclined to be generous.

A note on who signs the order document. It should be signed, or acknowledged in writing, by somebody with authority on both sides, and the name and role should appear on the document rather than only in the message thread. Unauthorised sign-off is a recurring source of cost and rework, because a term agreed by somebody without authority is discovered to be unagreed at exactly the moment it matters.

What Should Be Recorded When the Deposit Is Paid?

Seven entries, in one place: the date and amount, the bank details used, the reference quoted, the pro forma number, the specification version acknowledged, the production dates offered, and the release terms agreed. Seven short entries, and the buyer can then answer any question about the transaction without searching through a mailbox.

Add one more that is not about the payment: a note of what the programme looked like on the day. Which styles, which volumes, which materials. Deposits are paid months before goods arrive, and the gap between what was agreed and what is later expected is where most disputes start. A dated note of the agreed scope is the least expensive defence available.

1. Entity

Legal name verified against an official record

2. Bank

Account name matching the entity, changes confirmed through a second channel

3. Pro forma

Matched against the quotation field by field, including Incoterm and port

4. Specification

Signed off in writing with a version and a date

5. Slot

Start and goods-ready dates stated, compatible with the quoted window

6. Release

The inspection standard, who pays, and the event that releases the goods

The commercial frame is the one the deposit commits the buyer to: MOQ 500 pcs per style and colourway, sampling 6-10 working days from a signed-off tech pack, bulk production 35-50 days from written sample approval, inspection at AQL 2.5 under ISO 2859-1 General Inspection Level II, T/T 30/70, quoted FOB Xiamen with CIF and DDP available. Those figures should appear on the pro forma exactly as they appeared on the quotation.

One further check that belongs here because it costs nothing and is rarely made: confirm that the person sending payment instructions is the person the buyer has been dealing with. A change of contact late in a transaction, combined with a change of bank details, is the pattern to be careful of, and it is defeated by the same rule — confirm through a channel that was established before the transaction, never through the one that arrived with the instruction.

One final point about pace. Buyers are often asked to pay quickly to hold a slot, and sometimes that is genuine. It is also the standard pressure used to shorten due diligence. The response that works is not refusal but condition: the deposit can be released today provided the six checks are satisfied. Most of the six take minutes, and a production partner who cannot satisfy them in a day is telling the buyer something useful at exactly the right moment.

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