Vendor KYC Checklist: What to Collect Before You Pay

Use one vendor master record for each supplier entity. Keep the supporting documents together and give the party a clear status: awaiting documents, under review, approved or on hold. Treat this as a purchasing control; ask your CA or adviser which legal checks apply to your business.

Ask which legal entity will issue the invoice and receive payment. Capture its legal name separately from the name displayed on the shop board. Request PAN evidence through an agreed secure channel, then compare it with the supplier's other records.

Do not silently correct a mismatch. Ask the supplier to explain it and provide supporting evidence. Where the entity type or ownership is unclear, refer the record to your CA before approving it. Ask your CA which official PAN verification route is appropriate for your business.

• ✓Record who supplied the documents and how to contact an authorised person.
• ✓Check for an existing vendor record before creating another one.
• ✓Keep unresolved name or identity differences visible to the payment approver.
• ✓Collect only the identity records needed for the transaction and applicable checks.

For a supplier providing a GSTIN, use the official GST portal's taxpayer search. Compare the registration details shown there, such as legal name, trade name, status and address, with the supplier's records.

Save the check result with the date and reviewer. If the result conflicts with the invoice or onboarding documents, pause approval and ask for clarification. For a supplier without a GSTIN, record the explanation and ask your CA whether the proposed invoice treatment is appropriate.

Request the beneficiary name, account number, IFSC and supporting bank evidence, such as a cancelled cheque or bank-issued account confirmation. Let the supplier mask balances and unrelated transactions. Compare the evidence with the payment instructions and resolve any beneficiary-name difference.

Independently confirm the instructions with an authorised supplier contact. Record how you established that person's authority. Avoid relying entirely on the phone number printed in the same message that supplied the account details.

If you use a bank verification service, retain its result and investigate mismatches. If your process includes a small test transfer, confirm receipt through the independently established contact. Neither step should replace checking the supplier's identity and authority to nominate the account.

Ask whether the supplier claims MSME status. Where it does, request its declaration and registration evidence, compare the entity details, and use the official verification route before recording the claim as checked.

MSME classification can affect payment obligations, reporting and tax treatment, with different rules applying to different categories and circumstances. Have your CA confirm the current treatment; do not apply one rule to every supplier marked MSME.

Record whether status is declared, verified or awaiting clarification. Ask suppliers to notify you of changes, and review status when renewing the relationship or resolving conflicting documents.

Keep an accepted quotation, purchase order or contract that makes the transaction clear. Choose the document according to the purchase: a routine stock order and a continuing service arrangement need different levels of detail.

• Identify the buying and selling entities and the authorised contacts.
• Describe the goods or services, quantities, quality requirements and delivery location.
• State the agreed price, tax treatment and responsibility for additional charges.
• Define delivery, inspection, acceptance, returns and dispute handling.
• Record payment terms, any advance, and the evidence needed before releasing payment.
• For continuing work, agree renewal, termination and treatment of unfinished work.

Route tax questions to your CA and unusual contractual exposure to a legal adviser. Keep the accepted version with the vendor record so accounts can check the invoice against what was actually agreed.

Treat a bank change as a fresh approval. Hold payments to the proposed account while you verify the request. Apply the same process when the message appears to come from a familiar supplier or arrives alongside an urgent invoice.

1. Preserve the request and record who received it.
2. Contact the supplier through a previously verified number or another independently established channel.
3. Confirm that an authorised person requested the change and obtain fresh bank evidence.
4. Compare the beneficiary details and investigate any change in the receiving entity.
5. Have another person approve the update before payment release.
6. Retain the previous details, verification record and approval history.

• Approving a vendor because documents were received without comparing them.
• Treating a GST check as bank account verification.
• Copying payment details from an invoice without checking the approved vendor record.
• Accepting a different beneficiary without documenting the reason and approval.
• Letting the person entering changed bank details release payment without another check.
• Storing PAN and bank evidence in broadly shared folders or message groups.

Restrict document access to people who need it. Keep passwords and OTPs out of the vendor file. Before each payment run, check that the vendor is approved, the invoice matches the agreed purchase, and no unresolved bank change remains.

Use the supplier payment run guide to carry these checks into payment approval, and the bank reconciliation guide to follow payments through to the bank record. A reconciled debit should not be used as a substitute for supplier approval.