Vetting vendors is one of the most important functions property managers perform. It’s also one of the most time consuming, which is why so many are outsourcing the process to companies like Vendorsmart.
Anyone with experience selecting vendors is familiar with the importance of choosing wisely. There are many different factors involved in establishing a productive and stress-free working relationship. The most obvious of these is quality and reliability – and that’s often what most property managers are primarily focused on when researching potential vendors.
However, risk reduction and liability coverage are also huge factors in making sure a project goes smoothly. Appropriately vetting vendors is the most important step of the selection process. Done properly, it can prevent costly incidents that could endanger your project and property.
Mayhem mitigation
When your to-do list is a mile long, it’s all too easy to do a cursory check to make sure a vendor is licensed and insured and has a few good reviews before moving on to the next task.
But checking vendor licenses, insurance, and reviews are really just the minimum initial steps one should take when vetting potential business partners. Even the most highly recommended vendor can become the unwitting catalyst of a freak occurrence such as a mower that turns a sprinkler head into a missile that hits a vehicle, or God forbid, a person. Associations can be held liable for temporary housing expenses when residential areas are damaged by contractors.
Just because a vendor is “fully insured” does not mean they are insured for every type of loss. While you can’t avoid what you can’t imagine, however, you can mitigate the potential repercussions. Thoroughly vetting vendors is a large part of that, and involves the following:
Understanding insurance
Knowing that your vendor is licensed and insured isn’t enough. Insurance coverage can be complicated and usually isn’t a property manager’s specific area of expertise. Do you know exactly what to look for on a certificate of insurance and do you understand policy endorsements? Amendment forms can add, remove, or alter the scope of coverage and are important to consider in order to assess coverage accurately.
Background screening
A quick Google search is a good place to start, but far from a comprehensive background screening. A thorough background review should include research into the criminal actions or fraudulent activity associated with the vendor and its owner, as well as a verification of insurance and corporate status for the company. You may want to consider using the same tools construction contractors use to vet their employees and partners.
Appropriate documentation
Contracts and vendor agreements are an essential part of establishing a vendor relationship. Appropriate documentation clearly defines the scope of work, timelines, expectations, and responsibilities. Ensuring contracts are complete and legally enforceable can help your property avoid unsatisfactory work or liability for damages.
Fraud identification
Documentation can be easily falsified with digital technology. Unless your property management staff has a background in law enforcement (which, let’s face it, isn’t likely) they may not know how to identify signs of potential fraud. License and insurance documentation could be modified. That’s a big problem and could even indicate criminal activity that could lead to a myriad of problems for your property.
When bidding out a project, it’s wise to obtain proposals from at least three vendors. These proposals should include a detailed scope of work, references from prior customers, proof of insurance, and license. That’s a lot of paperwork, which is why many property managers are turning to vendor management platforms like Vendorsmart to vet vendors.
Vendorsmart has the time, experience, and expertise to accurately assess which vendors would be the most appropriate choice for your property and project.
Really knowing who you’re working with is essential not only to resident safety and project quality but also for mitigating potential issues that are unforeseeable. Protect your property and its interests by thoroughly vetting vendors, and build a network of reliable connections that can bring your productivity and peace of mind. The Vendorsmart support team continuously monitors and updates W9, COI, Business Licensing and other compliance documents to guarantee compliant vendors. To learn more about what we do and how we do it, visit Vendorsmart.com today.