Assessing the reputations of the people and companies with whom you do business has always been standard practice. Formally known as the vendor due diligence process, most successful companies have another party examine how any vendor operates before allowing them into their business circle.
To have an effective vendor due diligence report, you may need to contract with a veteran in the third-party auditing industry like TrustNet. TrustNet uses a variety of tools to thoroughly investigate the processes and practices of an organization and compiles them into a report.
Having these reports generated does more than simply allow you to document due diligence; it can also improve business.
Prospective customers and business partners may be interested in knowing that everything in your supply chain has been vetted. You can save time and build trust in your company quickly by utilizing vendor due diligence reports.
5 Effective Vendor Due Diligence Best Practices
Perform a Fiscal Review
Business relationships require full financial transparency. Unscrupulous businesses could intentionally try to mislead more successful companies into joining them to distribute their losses. It’s critical to make sure any entity with whom you’ll contract operates above-board.
Look Into Legal Issues
Since legal records are mostly public, this step shouldn’t be too difficult, but it must be comprehensive. All legal issues a company has had should be settled before you do any business with them.
Do a Cybersecurity Audit
Especially if this vendor will be handling sensitive information, hiring an experienced firm like TrustNet to perform a cybersecurity audit on their systems is a prudent idea. That will give you an inside look at potential damages in the case of a breach.
Create Classes of Sensitivity
Different vendors will have different levels of access to sensitive information. If you’re the custodian of sensitive data, you should establish a system of classifying the sensitivity of information a vendor will be accessing. You should make your vetting level of that company correlate with the level of information they’d have access to.
Evaluate a Vendor’s Employees
While it’s critical to collect company-level information about any prospective vendors, you should also be looking into vendors’ employees. Standard background checks on employees can reveal concerns that the vendor may have missed when they vetted an employee. Criminal and social history can help you predict potential personnel risks down the line.
Businesses often choose not to invest in vendor due diligence until there’s a problem somewhere in the supply chain. By allowing professionals to help you with vendor due diligence, you can stay ahead of the competition.
Letting professionals at TrustNet assist with the vendor due diligence process will help your company profit for years to come. In addition to providing you with peace of mind regarding your supply chain, it can be useful in future legal cases, and it can assist with attracting new customers and retaining current clients.