Supplier onboarding
Collecting and verifying a new supplier's information, such as legal name, tax numbers, banking details and compliance documents, before it can be paid.
In short
- It is the first line of defence against fake suppliers and payment fraud.
- Tax details collected here decide whether input tax credits can be claimed and whether withholding applies.
- A slow process pushes people to work around it. It needs to be quick as well as thorough.
Supplier onboarding is the process of setting up a new supplier in the company's systems. It gathers the information needed to order from, pay and account for the supplier, and checks that the supplier is who it says it is.
What is usually collected
- Legal identity: legal and trading names, address and business number.
- Tax information: GST/HST and QST registration numbers in Canada, a W-9 or W-8 form for US tax purposes, and residency status.
- Banking details: account information for payment, verified independently.
- Compliance documents: insurance certificates, security reports such as SOC 2 for technology suppliers, and certifications where relevant.
- Commercial terms: payment terms, currency and contacts.
The checks that matter
Verifying bank details by calling a known contact, checking tax numbers against official registries, and screening for duplicates against existing suppliers and employee records all prevent the most common frauds. For Canadian purchases, confirming a supplier's GST/HST registration supports the buyer's input tax credits. Paying a non-resident for services performed in Canada may require tax to be withheld. Residency needs to be confirmed at the start.
Supplier self-service portals, where suppliers enter and maintain their own details with documents attached, make onboarding faster and put information in the supplier's own words.
Worked example
A red flag at onboarding
A request comes in to set up a new consulting supplier. The onboarding check finds the supplier's bank account matches the personal account of an employee in the department that requested it. The setup is halted and referred to internal audit before any invoice is paid.