In today’s competitive and fast-paced business scenario, organisations have to streamline their operations to optimise profit and growth. Third-party outsourcing is a popular trend across industries and countries. Outsourcing certain tasks to a third-party vendor saves cost and time. Yet, there are inherent risks of outsourcing. Businesses have to ensure that confidential and sensitive information is protected. They also have to verify if the vendor carries out ethical processes while ensuring a safe and healthy working environment.
Vendor due diligence is cost effective
As the third-party contractors are partners to success, vendor due diligence before hiring them is critical to business objectives, success, the brand, customers and financials. As per studies, intangible aspects such as the reputation and goodwill account for 80% of businesses’ market value.
Vendor due diligence is the ideal way to check if the vendor meets all the criteria including confidentiality, compliance with regulations and ethical practices. Business due diligence is necessary to mitigate risks and to protect reputation.
With globalisation, the retailers deal with suppliers and contractor across the world and this adds another element of risk to the business. As new products emerge, new contractors or suppliers are likely to be added by retailers. With each new supplier, the costs related to auditing and compliance activities increase.
Vendor due diligence reports curated by professional agencies helps retailers and business owners to achieve a cost-effective way of ensuring the compliance of vendors.
How commercial vendor due diligence ensures organisational safety?
Vendor due diligence is a component of risk mitigation best practices. Vendor due diligence can ensure the vendor is legally compliant, has the required licenses and permits in the region of operation. Vendor due diligence also ensures the third-party contractor complies with anti-corruption legislations including the UK Bribery Act, US FCPA and the Indian Prevention of money laundering Act.
A professional agency specialising in vendor due diligence can help confirm if the claims made by the vendor are genuine and that there are no unfair trade practices carried out.
The aspects that are checked under vendor due diligence risk assessment
Vendor due diligence involves verification of
- Financial profile, including the quality of earning, assets, tax, commercial due diligence and the volume of products handled
- Supply chain gaps
- The third party supplier’s compliance with legislation, service agreements
- Credit ratings
- Legal or regulatory compliance
- Financial details
- Shareholding patterns
- Related companies
- Database & media checks
- Organisational structure
- Organisational capacity, operating procedures
- Building or personnel security
- Data security systems
- Insurance coverages
Vendor due diligence from professional providers
The world is expanding with greater emphasis on partnerships and alliances, hence setting the right tone with good vendors is a plus for every business. An automated and a robust 3rd-party solution would help organisations to streamline their end-to-end 3rd-party due diligence program, from vendor onboarding to risk assessment, due diligence reporting, information management and corrective action implementation.
Finding and working with the right vendors is critical to the organisation’s success, reputation and operational efficiency. Given the technological disruptions and data thefts across industries, the importance of conducting a thorough professional vendor due diligence cannot be stressed more.
AuthBridge is equipped with cutting-edge technology tools to carry out business due diligence across industries in a quick, cost-effective and efficient way. This helps businesses develop a better understanding of their vendors, gain insights on strengths, weaknesses and opportunities with the partners and alliances. With vendor due diligence, hiring the right vendor becomes hassle-free.