Vendor Onboarding Checklist
Vendor onboarding is the starting point for building long-term and successful business relationships. Traditionally, companies have used vendor onboarding to evaluate costs and assess a vendor’s capabilities. But this model leaves out one important component: risk.
Why should risk be part of your vendor onboarding process?
Evolving regulatory requirements, public opinion and the ever-increasing reach of social media have made any third-party risk a company’s risk as well. By addressing risk up-front during vendor onboarding, companies can ensure compliance and keep their company safe.
To help jumpstart the inclusion of risk in your vendor onboarding process, we’ve put together a vendor onboarding checklist to guide you. The checklist includes top questions to consider as part of your process.
Since every company and industry is different, however, be sure to tailor the checklist to meet the specific needs of your organization.
Vendor Onboarding Checklist: Where to Start
Vendor onboarding requires companies to collect and evaluate a significant amount of data, but it shouldn’t be frustrating for you or your potential vendors. Setting up a consistent vendor onboarding process helps alleviate the strain. Here’s an overview of the vendor onboarding process.
1. Procurement Requests
Need a product or service? Before bringing a vendor onboard, talk to the person making the purchase request about the proposed relationship.
At this stage, you want to gather basic information about the vendor and their product or service. How will the service impact customers? Will the vendor need access to sensitive information? Are they already an approved vendor?
The answers to questions like these will give you the details to determine the information you will need to qualify and evaluate the vendor.
2. Vendor Pre-Qualification
As part of onboarding, you’ll need to gather information on the proposed vendor, either from your internal systems, external data providers or directly from the vendor. This includes their contact information, banking information, D&B DUNS number and more. The goal is to collect upfront all the information you will need to facilitate communication, assess risk and enable transactions throughout the vendor relationship.
3. Vendor Evaluation
Next, use the information gathered during the request and pre-qualification stages to evaluate vendor risk.
Vendor risk assessments enable companies to detect financial instability, fraud, corruption, data security vulnerabilities or other risks at the outset of the relationship. Use your risk models to calculate risk exposure, identify insufficient risk controls and determine how insufficient controls can be remediated.
4. Remediate Ineffective Risk Controls
Evidence of risk doesn’t mean you can’t work with a vendor. You just need a plan to monitor and manage it.
Before proceeding, address the risks identified in the vendor evaluation by establishing a remediation plan, clearly communicating requirements and how the vendor’s progress against those requirements will be measured. If you understand your risk, you can manage it, and reap the benefits of the vendor’s product or service.
Today, vendors provide significant strategic value to businesses, driving revenue and better customer experiences. Risk factors, from information security to Anti Bribery and Corruption (ABAC) compliance, if managed properly, should not limit your business potential. This is why vendor onboarding is so crucial — it lays the groundwork for a beneficial long-term partnership where business needs and security and compliance requirements are met.
Download the full checklist.
Automate Vendor Onboarding
Vendor onboarding can be a lengthy and costly process. As regulations around data management, data security, bribery and corruption and other risks evolve, getting onboarding right is more important than ever.
As a result, automated regtech solutions are replacing traditional, manual onboarding processes to help financial institutions and global companies reduce third-party risk. Technology solutions standardize and streamline the onboarding process across an entire company, reducing inconsistencies, manual errors and resources required.
At Opus, we’ve found, that by using our Hiperos 3PM onboarding software, customers have reduced their onboarding costs by 88%.
Of course, companies want to bring vendors on board as quickly as possible to kickstart a profitable business relationship. Following a standard checklist and automating the onboarding process helps companies achieve this goal by reducing risk, building strong vendor relationships and ensuring compliance requirements are consistently met.
To learn more about Opus’ vendor onboarding solution, request a demo.