Wiring money to a supplier? Read this first!
If you source globally, you most likely have to wire money from time to time to the people and companies that are providing the materials and services for your products. Bank transfers are the most common and convenient way to exchange funds between currencies. And while they allow people from all parts of the world to do business together, there are several vulnerabilities inherent in this method of payment, especially for small, foreign buyers.
The most obvious issue is that once you press “send” on a wire transfer, you have very little recourse as a small buyer. If the supplier never contacts you again, or claims that they did not get the payment, what will you do? Even if you have the funds to take a trip to your supplier’s factory, what will you do when you get there? And do you even know if you have a valid address? These concerns are why it’s important to visit your supplier, carefully check their references, and consider a factory audit prior to doing business with a new partner.
But even if you have done your homework and are confident that your supplier is trustworthy, there is another level of potential danger. Scammers have been known to hack factory computers, receive their purchase orders, and request payment from clients to a different bank account. The factory doesn’t even know the purchase order was sent in the first place, and the buyer is unaware that they are dealing with a false contact. Scary stuff! Thankfully, this is a rare occurrence, but it’s absolutely worth taking precautions against.
A simple way to protect yourself, is to confirm that the factory’s invoice name, their business license name, and the name on the bank account where you are sending the money all match. Do this every time you make a payment! If you are diligent about cross-checking this information, it’s very unlikely that a scammer could syphon your funds.
Sometimes suppliers change their bank account details from invoice to invoice for legitimate reasons, so just because a new bank account surfaces, it doesn’t mean that you have to go into panic mode! Check names, ask questions and look at back-up documents until you feel comfortable.