If you fail to vet your vendors, you could be opening up your association to liabilities and other problems. Here’s how to put a vetting process in place.
Screening vendors for your association is a crucial step in protecting the community from lawsuits and liabilities. Businesses need to be licensed, have proper insurance, and show you a great track record for you to hire them. Otherwise, you could be in trouble down the road.
So where do you start? And why is vetting vendors so important for HOAs? You first need to understand every component you need to screen for each vendor to ensure they’re legitimate. Then, use a platform or online tool to keep track of documentation and take care of some of the communication tasks.
Here’s an overview of how to put the right vetting process in place.
Why is vendor vetting important?
First, just from a common-sense standpoint, you want to work with vendors who are legitimate and will not let you down. Otherwise, you’re just wasting your time and money. You don’t want to deal with businesses that don’t make their appointments or don’t provide high-quality services. So, at the very least, vetting helps you avoid some of those problems.
But more importantly, being selective and careful about your vendors can help you avoid liabilities or lawsuits. For example, if a vendor doesn’t have the proper insurance coverage and an accident occurs on the property that leads to an injury, you may be liable.
Additionally, signing a contract with vendors will ensure that they’re held responsible if they don’t meet their end of the vendor agreement. You need protections in place so that they are legally required to perform services of a certain quality and within a certain time frame.
Next, we’ll look at the key focus areas for screening your vendors.
Components of your vendor vetting process
1. Business licenses and permits
Always work with vendors who are licensed. Otherwise, you have no idea who you’re working with. The license should be active, so make sure there have been no issues with it, including revocation or suspension.
Your vendors need to have enough insurance coverage to handle damages. But remember that insurance certificates expire, and you always need to have the latest documentation, even after the initial hiring phase. For example, workers’ compensation insurance certificates expire twice a year. This means your vetting and management processes must be ongoing so that you can keep track of expiring policies.
3. Workflows and hours
Aside from the paperwork, you need to work with vendors who can accommodate your property’s schedule. Make sure you understand their hours of operation. Their location also may be a factor – if an emergency arises, how fast can they reach you? Go over their approach so that there’s no uncertainty about aligning their practices to your workflows.
Years of operation matter in some industries more than others, but you should always consider a vendor’s experience level. Try to visit their office space to see how they run the business, and meet the owner when possible. If the vendor doesn’t have an address or a physical location, it could be a red flag.
Another way to evaluate experience and expertise is to ask for references or view testimonials. Talking to other clients the vendor has had can give you significant insight into their effectiveness, quality of services, and level of accommodation.
5. View multiple businesses
For each project or vendor you hire, try to get proposals from multiple vendors. Compare the scope of work they each provide, ask for references, and ensure they have all the necessary licenses and insurance. This can help you keep your options open and see how one business operates when compared with another in the area.
Once you know these key components of vetting, you have to find the right tool that will handle many of these considerations and accompanying paperwork for you.
Work with vendor vetting partner
All of these vendor vetting considerations and paperwork can take up time. And it’s not likely that the people in charge of screening vendors have an extensive background in insurance and the law. That’s why it’s always smart to work with a vendor management platform that does a lot of this work for you.
VendorSmart helps you vet vendors, so you’re never worried about who you hire. We take the paperwork off your plate, so you can focus on other important tasks in running your community. We will gather and update vendor documents, ensuring they’re always up to date. We even each out to insurance agents regarding COI validity.