Vetting Vendors: The Case of an Event Planning Agency
Recently, I came across a local event planning agency that had passed us over for the protective services contract at a local event with many high-profile celebrity keynote speakers. What they should have realized 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. In turn, this resulted 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!
Nine 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, like an event planning agency.
No Background Screening or Proper Licensing
Vendor owners with 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 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 due to sub-standard performance issues.
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 either add, remove or alter the scope of coverage under the policy — must be considered.
Missing Signs of Fraud
Businesses should learn to identify signs of fraud when assessing vendors. It's not uncommon for documents to be modified and falsely state coverage.
We advise thoroughly vetting vendors and working with an established credentialing firm. Of course, this applies to any event planning agency and its contractors as well.
Does the vendor you are considering have the financial capability to perform the job you are contracting them with? Dun and Bradstreet is an excellent resource in the vetting process and may be able to assist you in knowing if a vendor is financially viable or not.
Don't let a lack of credentialing be your demise. Do your homework. If you don't know how we can help.