It’s fairly common practice for organisations today to outsource certain functions to third-party vendors but when your business is on the line, how well can you really trust contract workers in your organisation?
Some organisations don’t have all the necessary skills and expertise they require to complete every project in-house. This is particularly true with smaller companies who have to turn to third-party providers for a variety of essential business tasks.
Whether you need a graphic designer to assist on a larger project, a bookkeeper to assist with your accounts, or simply require a cleaning service once a week, hiring third party vendors can be a security risk. As such, selecting reputable and high-quality suppliers should be one of your top priorities.
Outsourcing critical business functions can offer significant opportunities, but can also represent a wealth of additional risks that may not only impact on the businesses’ bottom-line but on the company’s reputation as well. Vendor verification has become standard business practice as a result. More and more organisations are turning to other companies to ensure that the validity and credibility of suppliers is confirmed.
Vendor verification is a screening and monitoring process which ensures that suppliers and third-party vendors meet specific guidelines of vendor risk management. This occurs through the collection, auditing and verifying of key information about each supplier, including: Contractor Screening, Vendor Verification, Non-Financial due diligence and Procurement Screening.
A due diligence process ensures that your company has a consistent and practical way to screen all vendor relationships, particularly if the vendor is providing a core business function or has access to sensitive or confidential information. This diligence must also be carried out throughout the relationship and not just in its initial stages to avoid any unpleasant surprises.
During the due diligence review, you will need to collect the following items from each vendor:
- List of references
- License documentation
- Previous complaint history (if any)
- Company history (biographies of management and key personnel)
- Ability to deliver expected level of service (past experience)
- Contract review
If your company hires suppliers on a regular basis, it will save time and money if you have a standard set of diligence review templates for each time you employ third-party vendors. The more you can automate the process, the easier it will be.
The nature of the expected role will also determine the amount of diligence performed- a cleaning service will not be subject to the same level of verification as a company that handles important financial documents. In other words, the greater the perceived risk, the more diligence will be conducted.
The benefit of introducing vendor verification in your organisation is that dishonest vendors will be less likely to approach you to engage in misconduct. Ensure that you keep potential criminals at bay by managing your supplier relationships more proactively, in other words, from the start of the procurement process to the end of the relationship.
Contact us on email@example.com for assistance on setting up a vendor verification programme.