How to Properly Vet Your Vendors, Pay Early, And Five Other Ways to Make Your Suppliers Love You

photo of man standing in a warehouse

As a Small Business Owner, moving fast is a given. You are likely managing many tasks and wearing too many hats to count. But it is all worth it!—Being a business owner allows you to pursue your passion, be your own boss, have a flexible schedule, and become an expert in just about every business role possible.  

In the grand scheme of things, managing your supply chain is probably just another task that slips under your radar. But think about it– These are the people, groups and companies you will work with day in and day out to ensure you have the right inventory at the right time, which is critical to keeping your cashflow and sales flowing. At the end of the day, you’re entrusting these affiliates with your company’s name, reputation or money 

How often has a vendor, contractor, or supplier sent you sub-par materials or done poor work? Or, even worse, has turned out to be fraudulent and scammed you for your money? Here are some tips to make sure that the vendors you select are ethical, competent, and a great fit for your business  

Ensure that your vendor or supplier is not on a government watch list  

The U.S. Patriot Act requires that all small businesses comply with the Foreign Corrupt Practices Act and the UK Anti-Bribery Regulations. You want to steer clear of any supplier or vendor that has been found to violate either of these acts or ends up on a government watch list. Ultimately, the headache caused by working with them won’t be worth your time and effort.  

Interview multiple vendors  

Like hiring an employee, choosing to work with a vendor is determined by a variety of factors, including personality, quality of work and cultural fit. Especially if you anticipate entering a long-term relationship with a vendor, ensuring that they are a good fit is important. Bring in a few different vendors that you have identified as candidates and ask them the same set of questions. 

Ask for References – vendors should have a list of references at the ready, including name and contact information, for current clients who are willing to speak with you directly. 

Review Their Security, Especially Their Digital Security 

Chances are that the information you’ll share with the vendor will be somewhat sensitive. Whether it’s bank account information, Social Security Numbers or technical specifications, you want to know this information will be secure. With the number of data breaches on the rise, especially among businesses, make sure to ask the vendor what security measures they have in place. 

Make sure your vendor is financially stable  

One of the greatest unknowns for any small business is the financial wellbeing of their vendor. Most businesses assume their vendors remain financially stable; however, in the current economy, circumstances have changed for many vendors and typically this only is discovered when the vendor fails to perform. 

Be proactive 

Find vendors who take business continuity as seriously as you do and are willing to enter into responsible agreements with you to ensure that everyone’s needs are protected. If a vendor gives you the brushoff when you ask about their business continuity plan or try to set up an on-site visit, be proactive: start looking for a vendor who can provide the same product and is willing to partner with you at the right terms.  

Sources  

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