What to agree with a new supplier before the first order

Four things, before the first order

• A price list: not “what does it cost” but a list, in writing, that an invoice can be compared against
• A minimum order: the amount or quantity below which they will not ship, or will ship with a surcharge
• One contact: who receives the order, and who answers when something is short
• What happens when something is short: they complete it, they credit it, or the order closes as delivered

The first three sound obvious and in most cases genuinely were agreed, just out loud. The fourth is the one almost nobody settles in advance, and the only one of them that gets asked at an inconvenient moment.

Why a written price list rather than a price on a call

Because an invoice can only be compared against something. With no price list, the comparison of order against invoice checks whether the invoice matches what you asked for, not whether it matches what was agreed.

That sounds like a fine distinction and it is the difference between catching a price that went up and not knowing it did. A price that changed between the order and the invoice is caught either way; a price that changed between the agreement and the order is caught only if the agreement exists as a record.

Why the minimum order belongs here

Because it changes the behaviour of whoever orders, not the price. A business that does not know the minimum splits orders and discovers delivery surcharges, or orders more than it needs to clear the minimum and then throws part of it away.

It is also the number most easily forgotten, because it is right until the supplier changes it. Worth recording where whoever orders can see it, rather than in an email from last year.

What to agree about short deliveries, and why in advance

A short delivery is not a rare fault but a routine event, and it has three reasonable answers: the supplier completes it on the next order, credits what did not arrive, or the order closes at the quantity delivered and the rest is cancelled.

All three are legitimate, and they differ a great deal in money. The problem is not that there is no default, but that the default gets set in a conversation while the warehouse is busy and the supplier is under pressure.

Agreeing in advance turns that conversation from a choice into information, and above all it decides which request gets sent afterwards if the invoice already went out for the full quantity.

The first order is the test

You can agree everything well and still find the supplier works differently. So the first order is worth more when it is treated as a measurement rather than only as a delivery.

Three questions about it answer most of what you need to know: is the price on the invoice the same as the list that was agreed, is what arrived the same as what was ordered, and was the shortfall handled as agreed. Those are exactly the three comparison points, and on a first order they are a test of the supplier and not only of the delivery.

What this guide does not cover

The legal and tax side. Withholding-tax certificates, registration status, financial standing and credit terms are a real part of opening a new supplier, and they are out of scope here.

They were not left out because they matter less. They were left out because they depend on the circumstances of the business and on advice that does not belong on a page like this, and a guide that pretends to cover them is worse than one that says it does not.