5 Common Vendor Management Mistakes and How to Avoid Them

A property manager who has done his research on how to avoid common vendor management mistakes, shaking hands with a smiling new vendor.

Solutions for common vendor management mistakes

Choosing the right vendor is of the utmost importance, especially when you’re a property manager or the manager of an HOA. You’ve got your own needs to consider, as well as those of the many residents relying on you. 

Landscapers, electricians, construction workers, and other vendors must provide timely services that meet the health, safety, and aesthetic requirements of your property or neighborhood. Thus, it’s important to make sure you’re working with trusted companies and service providers. Choosing the right vendor can seem like a process of trial and error, but some of the most common vendor management mistakes can be easily avoided.

How to avoid vendor management mistakes

Mistakes happen but they can be greatly minimized with prior knowledge and planning. Here are five common vendor management mistakes and solutions to them. 

1. Not vetting new vendors

It is tempting to make a hasty decision when under time constraints. If you’re faced with emergency repairs or pressure from HOA members to complete a project within a tight timeframe, you might think you don’t have time to check vendor references, licensure, and other credentials. But, taking the time and effort to properly vet vendors can help you avoid a host of problems down the road.

Solution: Be sure to check a vendor’s credentials thoroughly before hiring them. Online platforms like VendorSmart can help connect you to trusted vendors in your area. Establishing ongoing relationships with properly vetted vendors means you’ll always have a reliable list of contractors to engage when needed. And, the more you work with a particular vendor, the better they’ll get at anticipating your needs. 

2. Vague contract terms

An ambiguous contract isn’t good for either party. A property manager or HOA manager should make sure the service(s), timeline, and payment terms are clearly explained in any vendor contract. It is better to put everything in writing rather than leave something open to misinterpretation. 

Solution: If a vendor sends you a vague or ambiguous contract, request that revisions be made. Make sure all project details are included in the contract to avoid any surprises or unexpected fees. Here are some terms you’ll want to include in a vendor contract:

  • A detailed explanation of the services to be provided
  • How the services will be rendered
  • Timelines for the proposed services
  • Service fees
  • How the fees will be paid: monthly, flat fee, etc.
  • Number of hours per week or month the vendor expects to work
  • Any extra fees for additional services
  • Whether services will be available after hours or on weekends
  • Who to contact in the event of an emergency

3. Lack of transparency

Problems can arise if you’re not transparent with owners or residents regarding vendor relations. Owners will want to know who is working on their property and they often want a say in the hiring process. Owners or residents could interpret your lack of transparency as favoring one particular company out of personal obligation or financial gain. 

Solution: Keep owners and residents updated on all vendor activity. Share which companies are in the running for a particular project, as well as how you arrived at your final decision. Being open and upfront about these matters can help you avoid potential conflicts with residents or owners. 

4. Misunderstanding or incomplete knowledge of HOA rules

Understanding the HOA rules of governance is essential whether you’re a property manager or an HOA board member. HOAs often have strict rules when it comes to managing a building or neighborhood and these rules are usually spelled out in the governing document. As a property manager or HOA board member, residents will likely rely on you for answers to questions regarding HOA rules. A thorough understanding of HOA rules of governance is important when working with vendors to ensure that the project or services are compliant with all regulations. 

Solution: Review the Bylaws, Rules & Regulations, Covenants, Conditions& Restrictions (CC&Rs) section of the HOA governing document before engaging an outside vendor. Once you’re familiar with the required standards, you can properly assess whether a particular vendor will be able to meet your compliance needs. 

5. Lack of a contractual exit strategy

You’ll want to have the means to exit or sever a contract if a vendor isn’t providing adequate service. There may be stipulations related to vendor contracts outlined in your HOA rules of governance (for example, some vendor contracts can be no longer than one year in length).

Solution: Make sure to include potential termination terms in any vendor agreement. As with all contract terms, you’ll want to make sure they’re in line with your HOA governing document. Forgoing a termination clause in a vendor agreement could open the door to potential problems. Give yourself an “out” if the vendor doesn’t provide satisfactory service or if unforeseen complications arise. 

Being aware of these common vendor management mistakes, and the steps you can take to avoid them will help you select the right vendor for each project. 

VendorSmart for managing vendor relations

If you’re a property manager or HOA director, VendorSmart can connect you with trusted vendors in your area. Our comprehensive vendor management platform is aimed at minimizing the risk of working with third-party vendors. Contact us today to find out how we can help you as a property manager or HOA board member.