Having a Vendor Compliance Checklist helps streamline any claims management processes. By establishing clear delivery timelines and insurance documentation requirements, you can ensure that vendors are always in compliance.
Vendor Compliance sounds simple enough, but it isn’t; it’s a must to keep vendors in compliance. If they’re not in compliance, it’s a third-party risk that you are liable for. Therefore, vendor compliance is as important as your own compliance.
An efficient vendor compliance audit guarantees keeping your liabilities to the minimum and creates the demand for compliance from vendors.
So, how do you write one? What is there to consider? How can technology give you a hand in keeping your vendors in check?
What is Vendor Compliance?
Vendor compliance is, basically, your guarantee from suppliers and other third parties associated with the project that they are meeting specific requirements. These requirements will vary from industry to industry. But any supplier or Vendor will have to abide by typical standards, whether a type of contract or insurance coverage for their workers or materials.
5-step checklist for an improved management of Vendor Compliance
- Perform Due Diligence
Before working with a new vendor, supplier, or another third party, conduct due diligence before onboarding. The due diligence process should assess not only a vendor’s financial and operational stability, but also track any potential risks they could introduce to your business. - Conduct Risk Assessments
Perform multiple assessments of potential third-party risks, counting benefits, costs, and liabilities. Also, consider internal charges, such as the creation of a third-party management position or the long-term financial implications of the relationship. - Evaluate the Vendor’s Vendors
It’s also valuable for businesses to take subcontractors, internal operations, knowledge of relevant applicable governmental laws, and insurance coverage of their vendors into account. Compliance Management Software enables companies to do it quickly. - Create a Vendor Compliance Policy
For a third party to work with a business, it must legally agree to its terms, including legal mandates, operational guidelines, and detailed consequences if standards are unmet. - Have everything in writing
While all third parties must agree upon the compliance program, a company should create a unique contract for each client to ensure specific goals and guidelines are met. Contracts should include the scope of responsibilities for both parties, cost, and compensations.
How to Make Vendor Compliance, Painless
Building a policy that strengthens compliance and vendor relationships may seem like an uphill battle but there’s a way to make it easier. Following these steps will help vendor compliance be a part of your strategy instead of a battle with a third party.
Start Slow and Take a Strategic Approach
Assign roles and responsibilities as relevant, and make sure you’ve communicated expectations and accountability. Identify the most significant challenges concerning vendor compliance and develop a strategy to address them.
Focus on the future
Individual costs generated by small mistakes add up to a big pile. Any policy you develop should focus on eliminating the often too-small-to-see cost of small mistakes by third parties in the past without destroying relationships with Vendors.
Maximize Convenience for Better Compliance
Vendor risk management and vendor compliance work best with clear and consistent expectations — and ramifications for non–compliance. Focus on brevity and clarity for the best results. Make it easy for them to review your policies and requirements.
Motivate instead of Punishing
Change takes time. Stage your policy implementation over several months and give your vendors time to understand and implement your policies. During the first stages of implementation, you can check vendor performance and compliance and adjust, as necessary.
Clear Communication is Key
Compliance management benefits your company and the vendors who supply you. Don’t be afraid to lay it all out.
This is a powerful opportunity to strengthen vendor relationships and provide clear guidelines. Strong vendor management — and the relationships it builds — begins with strong, clear, and easy-to-follow compliance.
You can achieve substantial cost reductions and improve efficiency by making vendor compliance a crucial part of your business.
Technology to Help you Help Your vendors
Compliant management tools are the best way to assist vendors in complying. These types of tools allow you to oversee the entire vendor and requirement list, and check compliance end-to-end.
Terra is that tool. While allowing you to oversee claims management it also provides powerful compliance software to ensure vendors certify the policies they claim and must have. In conclusion, remember that someone who has not been assessed is a significant liability. So, assessing your vendors by following the steps on the checklist and by using technology in your favor will avoid significant headaches.
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