Property managers, owners and persons responsible for vendor on-boarding and compliance collect and maintain a wide variety of paperwork. They ensure contractors and third-party service companies meet all criteria set by their company standards. Activities include verifying vendor tax status, validating active contracts, researching trade license status and confirming insurance coverages of the companies they do business with. Individuals assigned to compliance tasks may also review and store the artifacts they collect.
Documents collected over time from various parties can be challenging to locate on demand, especially when multiple persons share accountability for the collection process. Matrix organizations are common, and responsibility for compliance can be distributed across branch offices, or performed by different employees in a single office. Duties can be divided departmentally, based on the service the provider performs or grouped by various vendor types. For example, financial records and W-9’s may be tracked by accounting departments. Trade license credentials and insurance policy certificates may be kept by others. Executives, legal departments or their assistants may be storing statements of work, non-disclosure agreements (NDA’s) and other contracts signed by vendors. The full suite of compliance-related documents may not be kept in the same place or by the same individuals.
Gaining visibility into vendor credentialing tasks across the enterprise is key. When there is no view of which vendors other people in the company are using or what a vendor’s latest status is in the onboarding or renewal process, firms are opening themselves up to paying higher service costs and increasing their risk exposure. There is an operational expense from tracking multiple vendors by different offices, as well as the danger of storing duplicate vendors with different data associated to them.
Smaller organizations may have started out with a more clear and centralized process. With company changes such as new business acquisitions, replacement in staff, or due to office reorganizations, those initial good habits may falter over time. Rapid growth within a company, or additions of new lines of business may leave vendor credentialing to less-capable hands or disinterested departments to carry out.
Managing Vendors Locally Can Spell Trouble
The immediacy of communications has disrupted business. Managing the core business to keep customers satisfied can lead to daily distractions, and shortcuts to standard process. Where is the time in the day to protect valuable data collected for compliance? Aside from office computers, many workers carry mobile devices, laptops and flash drives containing locally scanned or stored documents. What happens if one of those devices is lost or stolen? Devices may be disallowed by policy, but can be used to expedite materials by busy staff.
Also, many companies don’t have vendor information archived centrally with standardized naming conventions to make things easy to find. Physical files, scanned copies and e-documents may be stored somewhere, but finding them in a moment’s notice can be exasperating. The exact location may be in the mind of the last person who saved it, but that person may no longer be employed there. If that’s the case, a company may be at high risk for problems if they need to produce needed documentation. In times of trouble, organizations can come up short trying to quickly locate information they thought they had.
3 Big Reasons to Centralize Vendor Compliance Activities:
Here are the top reasons to centralize vendor compliance and credentialing:
Centralizing Reduces Risk - Having access to the most up-to-date details on all vendors reduces overall risk. Knowing exactly where to find current signed agreements, Certificates of Insurance (COI’s), corporate and entity tax status (W-9’s, TID’s), criminal background checks and trade licensing dates can mean the difference if there is ever a vendor accident or contractor-related jeopardy causing financial loss. Being unable to produce related documents means non-compliance and potential for problems. Likewise, having a centralized location to review and inform company offices is important. Sometimes multiple departments or staff are unaware of a recent failure of a vendor to meet required criteria. Sharing this type of information is critical for mitigating risk and staying in business today.
Centralizing Saves Time - It is rare that businesses have staff available and hours in the day to perform daily checks on vendor status and credentialing. Often duplicate efforts are made to call the same insurance agent or broker. Sometimes tracking the status of trade licenses from state and local boards is handled with a series of phone calls or internet research efforts by more than one person. Hunting down signed agreements on file or requesting copies can represent hours (or dollars) going out the door. Resource time like this could be spent on mission-critical tasks instead. Centralizing the vendor credentialing process is an opportunity to have teams with expertise communicate, collect, review, track and report vendor activities. Efficiencies can be leveraged through repeatable process steps, but they must be well-thought out and done expertly with specific targets in mind.
Centralizing Helps Consolidate Vendors - Having a centralized set of vendors helps organizations find new ways to save money through consolidation. For example, more than one property may be using the same landscaping company or share a painting contractor in a different location and not be aware of it. With insights into the company’s entire vendor universe, opportunities arise to leverage bulk pricing and build better arrangements via vendor consolidation. Reducing redundant vendors and eliminating duplicate vendors can decrease risks to a company. It also simplifies the vendor credentialing process and saves time.
A Single Source of Truth
ERC brings the benefit of a single source of truth for a company’s vendor onboarding, credentialing and maintenance. By having one centralized system of record, companies can avoid unnecessary exposure to risk. Propagating the same data for all vendors system-wide makes the process itself accountable. Keeping all data captured on vendors in an easy-to-find repository places the company’s stakeholders, principals and customers in a more secure position overall.
By knowing that each vendor will be held to the same standard in the credentialing process, a company can leverage that accomplishment in other areas of their business. With this type of knowledge at their fingertips, companies can work to reduce insurance premiums and negotiate better deals with bulk rates by consolidating their vendor list overall. Knowing how a particular vendor’s pricing lines up against other vendors in your portfolio who are doing similar work can be eye-opening.
Uniform Approach to Vendor Compliance
ERC initializes the process with a company’s team members and stakeholders to discover their third-party vendor needs. By taking the time to learn about a company’s vendor portfolio, a more uniform credentialing process can be setup and take place. ERC helps organizations seek out, review, track and provides time-sensitive updates on vendors’ credentialing status. Centralizing the process and the housing the artifacts collected means that on-boarding a vendor and maintaining their details can be handled the same way from end-to-end and from office to office. Some companies see ERC software as a their intelligent vendor command center, controlling major on-boarding and evaluation steps along the way. ERC helps companies manage vendor change and remain prepared for when something unexpected happens.
Enterprise Risk Control brings to market one of the most advanced, feature-rich vendor management solutions in the industry. Our technology, coupled with our unparalleled service, allows you to automate the collection of vendor information based on their risk exposure. This information is continuously evaluated against your criteria, thus reducing your exposure while giving you the tools to effectively manage your vendor database. ERC services all sizes of business across all business verticals. Small oversights can have enormous consequences; let ERC provide you with the peace of mind that comes from knowing that you are proactively protecting your business with our accurate, intuitive and customizable compliance solution.