Vetting Vendors. Don't be left holding the bag.

Vetting Vendors. Don't be left holding the bag.

Recently, I came across a local event planning company that had passed us over for the contract protective services contract at a local event with many high profile celebrity keynote speakers. What they failed to realize is the vendor they chose to contract with had no license or insurance permitting them to do the work. Just today, the state regulatory agency was made aware of their crime, resulting in a fine and a cease and desist notice. It's likely the event planning agency that hired them didn't even know. And that's the problem...

9 times out of 10, there are no significant incidents requiring insurance to get involved. But in the event there is an incident with an unlicensed and uninsured vendor, who picks up the tab?

Below are a few things to watch out for when selecting a vendor.

No Background Screening or proper licensing

Vendor owners who have criminal histories, or companies that are not insured, can put your company at risk. A background review that includes verification of corporate status, potential fraudulent activity, possible criminal actions against a vendor’s owners and insurance verification can help identify vendors who are bad news for businesses. As for a proof of license and insurance.

No Vendor Agreements and Contracts

Vendor agreements and contracts set the expectation of performance between the vendor and client. Without them, the property management company may have to settle for unsatisfactory work or be responsible for damages as a result of issues related to sub-standard performance.

Inadequate Insurance Knowledge

Businesses sometimes don’t fully understand what to look for on a certificate of insurance. Policy endorsements − amendment forms attached to an insurance policy that will either add, remove or alter the scope of coverage under the policy – must be considered.

Missing Signs of Fraud

Businesses should be educated to identify signs of fraud when assessing vendors. It’s not uncommon for documents to be modified and falsely state coverage.

It is advised to fully vet vendors and work with an established credentialing firm.

Financial Viability

Does the vendor you are considering have the financial capability to perform the job you are contracting them with? Dun and Bradstreet is a great resource in the vetting process and may be able to assist you knowing if a vendor is financially viable or not.

Don't let lack of credentialing be your demise. Do your homework. If you don't know how, we can help.

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