Partners and vendors play a significant role in the success or failure of a business. Not acting cautiously and choosing the wrong partners can hurt your business, lead to financial loss, destroy the credibility of your business, and may also land you in litigation.
Partners and vendors play a significant role in the success or failure of a business. Not acting cautiously and choosing the wrong partners can hurt your business, lead to financial loss, destroy the credibility of your business, and may also land you in litigation. That is why it is so critical to do a thorough background check and choose the right partners and vendors. Here are a few vendor due diligence checks that you need to consider.
Profiles of the vendor
Prior to partnering with a vendor, it is important to check their background on LinkedIn, their company websites, or other platforms. If the vendor is not visible on social media sites, then there is a possibility that they are not reliable. Trustworthy companies will always share the profile of their management and business on their websites and other channels because it increases their credibility and reputation. You can also check the reviews of the vendor on Glassdoor or Google. If the reviews are not favourable, then it is advisable to consider other options.
Vendors and partners who are financially unstable can pose a serious risk to your business. If the company is facing a liquidity crunch, then there is a high probability that it may become bankrupt. This can seriously impact your business. So, check their financial background, especially their turnover during the last three years. This will enable you to determine whether it is safe to partner with a particular vendor.
Is the vendor filing GST returns regularly? If not, then partnering with such a company can cause serious issues because you will have difficulty in claiming tax credits. You can check the vendor’s tax history by running a check on the GST portal. For this, you will need the GST number of the company. So to avoid any hassles, it is necessary to stay away from vendors who are defaulting on their GST filings.
You can get a fair idea of the bandwidth of a vendor by checking the headcount on LinkedIn or their company website. The company’s webpage will give detailed information, including the number of employees working for the vendor. If the headcount information is not easily available on the vendor’s LinkedIn page or the company website, you can request them to share the information. You can also scan the Labour Department website and along with the headcount, get any other particulars that you need. To access the vendor’s information on the Labour Department website, you will require their corporate identification number.
Testimonials are one great way to gauge the reputation of the vendor or company. Companies usually include testimonials on their websites to give their partners and customers a much better idea of their clients’ experience in dealing with the company. If you do not find any client references, ask your vendor to provide them to you. Reputed vendors will always be willing to share any references with their partners because it will validate their position in the market.
Partners and vendors play a crucial role in the success of a business. Therefore the decision to partner with a particular vendor should never be made in a hurry. Check the vendor’s credibility, age of business, reputation, GST filing among others. In certain businesses like cross-border trade, you need to rely on trusted partners. You can also take the help of companies offering superior vendor due diligence services. Tazapay is a credible company and is helping small and medium-sized businesses to securely undertake cross-border trade. The company helps businesses by conducting background checks on their trade partners and protects their money with advanced technologies like escrow.