A Safe Bet: What Every Business Should Know before Contracting a Vendor

For many businesses, working with vendors is a necessity. It even has several advantages, such as allowing you to provide additional services to your customers. However, there is always a risk when working with a third party on business matters. There could be legal disputes, quality of work issues or other problems. So how can businesses protect themselves by choosing the best vendors in the first place? This guide will go over the steps every business should take before making the final decision to contract with a vendor.

Get Referrals

Referrals are important for you as a customer, and they are just as important for you as a business. When looking into contractors, see what other businesses have to say about them. It is always best to ask a handful of specific questions if you can, although an overall analysis is helpful as well. But try and get more than just, “Yes, we were pleased with them.”

Your business likely has special concerns or specific needs, so inquire about those when asking for a referral. For example, you may need an IT support firm that can do on-site calls. When getting a referral, ask if the IT support firm offers that specific service, and if the company has used it, what their experience was.

Get Bids

Getting bids is particularly important if you will be using different vendors for different occasional jobs, rather than a long-term, ongoing contract. This way you can get the best deal from the best vendor for each individual project.

Even if it is for a one time project, bids from a number of different vendors can help you compare their services for the price they are offering. Never only go by price alone. See what services are being offered and also take into account the reputation and value of the company. For example, one vendor might have a relationship with vendors of other services that could be of use to your company.

Require Insurance Information (and Keep It on File)

Insurance is one of the most important requirements for establishing a relationship with a contractor. It can be a good idea for your company to have a policy in place regarding vendor insurance, such as what your minimum acceptable requirements for coverage are.

Once you choose to do business with a contractor, keep that insurance information on file in case you ever need it. This is particularly helpful if you contract with a number of vendors and need to ensure they all remain up to date on their insurance coverage. If you are unsure how much coverage to require, speak to your own insurance agent, insurance company or attorney to get a good idea.

Hire a Vendor Credentialing Service

If your company does not have the time or resources to vet vendors, turning to a vendor credentialing service is another helpful option. These services screen vendors for you and ensure that you are only working with the most qualified contractors. Be sure to find a service that specializes in or has extensive experience working with the types of vendors you are looking to contract with. For example, there are significant amounts of vendor credentialing services working in the healthcare industry due to the confidential nature and special requirements of medical supplies, samples and information.

When looking to contract with a vendor, you want to make a safe bet. Contracting with the right vendor will give you a valuable partner in business and also be a useful addition to the services you provide your customers. Do your homework and vet each potential vendor carefully, and you’ll be making a safe bet for your company’s future.