Before You Give Credit: A 10-Minute Buyer Check Every Indian Supplier Should Run

Selling on credit is how B2B trade works in India. A new buyer asks for 30, 60 or 90 days, you want the order, and you say yes. Months later, the invoice is still open and the phone is switched off.

Most of those losses are not bad luck. They are buyers nobody checked. The good news is that a useful check takes about ten minutes, much of it using public information. Here is the checklist we recommend.

1. Verify the GSTIN is real and matches the buyer

A GSTIN has 15 characters:

• the first two digits are the state code,
• the next ten characters are the business's PAN,
• then an entity number, the letter Z, and a check character.

Use the "Search Taxpayer" facility on the GST portal and confirm:

• the legal name and trade name match the party you are dealing with,
• the address of the principal place of business makes sense for their size and trade,
• the constitution (proprietorship, partnership, company) matches what they told you.

A mismatch in name or state is the first and cheapest red flag to catch.

2. Check the registration status and age

On the same search, look at:

• Status: it should be Active. A Cancelled or Suspended GSTIN is a serious warning.
• Date of registration: a buyer registered only a few weeks ago asking for large credit deserves extra caution.

3. Read the filing history

Regular GST filing is one of the best proxies for a disciplined business. Look at whether GSTR-1 and GSTR-3B are being filed, and whether they are filed on time.

• Consistent, timely filings: a good sign.
• Frequent late filings or long gaps: the business may be under cash-flow stress, which is exactly when suppliers get paid last.

4. For companies and LLPs, check MCA records

If the buyer is a company or LLP, the Ministry of Corporate Affairs master data shows its status, date of incorporation, directors and whether annual filings are up to date. A company that is "struck off" or has not filed for years should not be getting credit from you.

5. Look for court cases and complaints

Search the eCourts services by the business name and the names of its promoters. You are looking for patterns, such as several cheque-bounce (Section 138) or money recovery cases filed against them. One old dispute is normal in business; a string of recent ones is not.

6. Ask the market

Ask two or three suppliers who already deal with this buyer how they pay. In many trades this is still the most revealing check of all. Ask specifically about days to pay, not just "are they good?"

7. Set terms that match the risk

The check is only useful if it changes your decision. A simple framework:

Whatever you decide, put the terms in writing: credit period, credit limit, interest on late payment and the invoice acceptance process. If you are a registered micro or small enterprise, mention that payment is due within the time allowed by Section 15 of the MSMED Act (never more than 45 days).

8. Keep watching after the first order

Buyers change. Re-check key accounts periodically, and act early when a normally punctual buyer starts delaying. Early reminders recover far more than late legal action.

Do it in one minute instead of ten

FundRaksha Trust brings these checks together. Enter a GSTIN for a free basic check of GST status, then unlock a full report with filing history, the owner's credit score and court cases, along with a clear give credit / give with care / avoid recommendation and suggested terms. There is no subscription: you pay per check.

When payments do slip, FundRaksha Collect follows up automatically, and FundRaksha Legal steps in with a formal notice if needed.

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This checklist is general guidance for managing trade credit. It is not a guarantee of any buyer's creditworthiness.