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Authenticate Prospective Partner With Vendor Due Diligence

By Author: Naman Vohra
Total Articles: 91

Due diligence holds importance when it comes to matters related to knowing about an entity or an individual. Due diligence becomes an important practice given the association of your organisation's brand name with the vendor you plan to partner with. The primary lookout for any organisation prior and post selection of a vendor is the expectation of maximum return on investment. This is no doubt a valid concern but while short-listing a vendor you should look beyond the financial aspect of things.

Vendor due diligence should look into the ethical aspect of things. The background check of a vendor will establish the authenticity of the entity. It will highlight if the vendor really has an existence. To thrive in a business environment several government registrations needs to be achieved. Vendor due diligence will verify whether the government registrations presented by the vendor is valid or not and will save you from empanelling with a fraud vendor. It is imperative to know about the set of customers the prospective vendor has. Vendor due diligence will reveal if the set of customers shown are for real. It is another area which showcases the authenticity of the vendor.

The vendor should possess the required capability in order to be shortlisted by you. This can be gauged by looking into the strength of the staff as well as their capability. The more capable staff a vendor has, the more would be the service delivery standards. In order to know more about the vendor you can also take up the initiative to speak to his previous or current clients. This move will help you in getting a better understanding of the quality of services provided by the vendor and reveal the level of satisfaction his clients have through their testimonials. You can venture further in knowing more about the vendor by speaking with the auditors who have audited the vendor's business. They can come up with information regarding irregularities if encountered ever. It is also prudent to have a word with his vendors to know whether doing business with them would be a wise decision.


Organisations should take a prudent step by looking into the authenticity of the entity by verifying the documents related to the vendor in question. Due diligence goes further looking into genuineness of the vendor’s business. Verification of the capabilities of the vendor and the expertise possessed will be helpful to ascertain the value proposition of the agreement entered. Vendor due diligence also looks into political affiliations to gain more clarity on the vendor’s background.
Any given organisation, which is planning to sign an agreement with a potential vendor, should consider the importance of being aware about the vendor’s compliance history. This can be crucial as any discrepancy found in the entity’s compliance history could become a valid point resulting in striking off the deal. Additionally, in the process of vendor due diligence, the vendor is screened for various national and global regulations like UK Bribery Act, Indian Prevention of Money Laundering Acts.
Due diligence of a vendor empowers the organisation to short-list the best amongst the long list

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