Vendor onboarding

Vendor onboarding in India: documents, checks and a process

Vendor onboarding is collecting a new supplier's documents, checking them, and approving the supplier before anyone pays it. In India the core documents are the supplier's PAN card, GST certificate and a cancelled cheque, and the checks are whether the PAN, GSTIN and bank details are valid and belong to the same business.

Forge reads those documents, extracts the PAN, GSTIN, bank account and IFSC, and checks them against each other in seconds. A supplier whose documents agree goes forward; one whose documents do not is sent back with the reason.

The process

Most organisations follow the same six steps, whatever tool they use:

Collect the documents from the supplier.
Extract the details: legal name, PAN, GSTIN, bank account number, IFSC and bank.
Check them: formats, consistency between documents, and that the supplier is not already on your books.
Review anything that failed, and ask the supplier for what is missing.
Approve the supplier, by someone other than the person who requested it.
Create the supplier in your accounting or ERP system, so it can be paid.

The checklist

Required for almost every supplier:

PAN card of the business.
GST registration certificate, if the supplier is registered.
Cancelled cheque, or a bank letter, in the business's name.
Recommended: Udyam (MSME) certificate, which affects payment terms under the MSMED Act, and a signed agreement.

What Forge checks

Every check is done by code, so the same documents always get the same answer:

Each required document is present.
The PAN has the right format: five letters, four digits and a letter.
The GSTIN has the right format, and characters 3 to 12 are the supplier's PAN, so the GST registration belongs to the same business.
The IFSC has the right format, and a bank account number is present.
The name on the cheque matches the legal name, ignoring words such as Pvt, Ltd and LLP.
The PAN and GSTIN do not belong to a supplier you already have.

What you get back

A supplier whose checks all pass is marked Active. A failed check marks it Needs info, with each check shown as passed or failed so the reason is plain. A PAN or GSTIN that matches an existing supplier marks it Rejected, which stops the same supplier being set up twice.

Each supplier moves through stages, from intake and extraction to validation, review and approval, and every move is recorded. A step for a named approver, who cannot be the person who submitted the supplier, is being built.

Where the documents go

The documents are read by an AI model to extract the details, under terms that keep them out of training. They are kept with the supplier's record in your organisation's workspace, and only members of the vendor app can open them.

A supplier whose GST certificate does not match

1Someone in purchasing uploads a new supplier's PAN card, GST certificate and cancelled cheque.
2Forge extracts the details. The GSTIN is well formed, but characters 3 to 12 are not the PAN on the PAN card.
3The supplier is marked Needs info, with that check shown as failed.
4The first certificate turns out to be a sister company's. The supplier sends its own, every check now passes, and the supplier goes on to review.
5A month later, a colleague in another team submits the same supplier again. Its PAN and GSTIN match the existing record, so Forge marks it Rejected as a duplicate.

What it does not do

It does not check the GST portal, the income tax department or the bank. A well-formed GSTIN may still be cancelled, and a bank account is not confirmed with a test payment.
The GSTIN's final check character is not verified.
The name match is loose: it accepts a name that contains the other. It is skipped if either name could not be read.
The named-approver step is not built yet. Today any member of the vendor app can move a supplier on.
Suppliers are not sent to your ERP or accounting system. That step is manual.

Questions

What documents are needed for vendor onboarding in India?

The supplier's PAN card, GST registration certificate if registered, and a cancelled cheque or bank letter in the business's name. A Udyam (MSME) certificate and a signed agreement are recommended.

How do I verify a vendor's PAN number?

Check its format, five letters, four digits and a letter, and check that it appears inside the supplier's GSTIN, which ties the GST registration to the same business. Forge does both. To confirm the PAN is valid and active, use the income tax department's verification service.

What is the difference between vendor onboarding and vendor KYC?

Vendor KYC is the identity and document checks. Vendor onboarding is the whole process around them: collecting, checking, approving and setting the supplier up for payment.

Can Forge check whether a GSTIN is active?

Not yet. It checks the GSTIN's format and that it contains the supplier's PAN, but it does not query the GST portal.

What should vendor onboarding software do?

Read the documents so nobody retypes them, check them against each other and against your existing suppliers, show why a supplier failed, require an approval by someone other than the requester, and keep a record of every step.