Opt For Vendor Due Diligence Before Partnering

By Author: Naman Vohra
Total Articles: 42

Collaborating with an entity can be very fruitful but at the same time it can carry lot many risks. Partnering with an unknown entity can expose your organisation to various risks, like that of suffering monetary losses, loss of reputation etc. With the possibility of many unknown risks associated with shaking hands with an unknown entity, the importance of vendor due diligence cannot be understated. By conducting business partner due diligence, you can very well weigh the pros and cons attached to joining hands with that particular company. Moreover, it also helps you assess whether the potential business partner is a right strategic fit for your organisation or not.

Vendor due diligence helps in establishing the authenticity of a prospective vendor. It will highlight if the vendor really has an existence. Vendor due diligence will verify whether the government registrations presented by the vendor is valid or not, and will save you from empaneling 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.

Vendor due diligence is generally conducted by an independent third party on the prospective vendor who is engaged by an entity who want to outsource their task to vendor. The third party due diligence company conduct thorough due diligence and prepare a due diligence report. As with all due diligence reports, it is designed to give potential buyers a degree of comfort regarding the risk of partnering with a prospective partner. There are companies providing vendor due diligence services which carry out a thorough search on the background of the vendor. A number of checks viz, address, criminal record, global database checks and many more are conducted to confirm the information already stated by the vendor. With a due diligence report on prospective vendor from a credible risk assessment company with required expertise, you can be rest assured about the vendor you have chosen.

By taking a simple measure like vendor due diligence vital information can be gathered about the prospective vendor and the people associated with it, which will help in taking safe and risk mitigated decision.