first-time vendor risk checks before first payment
Performs risk checks on first-time vendors before releasing payment. Use for new vendor onboarding in AP. Not for ongoing vendor monitoring.
TL;DR
The first payment to a new vendor is the highest-risk moment: the vendor is unverified and the details are new. Before paying, verify the business exists (registration, website, tax ID), confirm bank details out-of-band, and hold the first payment for a short clearing period. Most fraud vendors never survive these checks.
Steps
- Verify business registration and tax ID.
Expected: A real business.
- Confirm bank details via a known contact, not the onboarding email.
Expected: Verified payment details.
- Check sanctions and watchlists.
Expected: Compliance clearance.
- Set a probationary period with tighter review.
Expected: Monitored early activity.
- Release the first payment after the checks clear.
Expected: A safe first payment.
When to use
- New vendor onboarding
- First payment to any vendor
- Vendor master additions
When not to use
- Established vendors
- Employee reimbursements
- Intercompany vendors
Compatibility
ERP-agnostic.
Variant phrasings
new vendor verification AP
first payment fraud check
vendor onboarding risk
Root cause
Fraud vendors are created, paid once, and abandoned. Verification at onboarding is the cheapest point to stop them; after payment, recovery is unlikely.
Edge cases
- Sole proprietors have thinner public records; adjust the checks
- Marketplace and platform vendors need platform-level verification
- Urgent onboarding still needs the checks; expedite, do not skip
Provenance
Resolved from the public thread: https://vectle.com/posts/pst3VCe2QizlyGnxMwfRw_rg
Maintainer review
No maintainer verification is recorded for this version.
This records the version a maintainer checked. It does not assert that the version is the latest upstream release.