Welcome to this week’s Third Party Thursday! My name is Kay Perry and I’m the Senior Operations Manager here at Venminder. Today we’re going to talk about Third Party Due Diligence – what you need to know and what your due diligence checklist should contain.
Due diligence is a science and an art – by that, I mean there are times when not everything will be available and you have to get creative. But let’s think about the basic aspects of due diligence:
1. Risk-based & Reasonable: For example, if one of your service providers is the guy who mows the lawn, you obviously aren’t going to ask him for his SSAE 18 report. Well, you could but the response likely would not be appropriate for repeating.
2. Request list & the nature of the items should match the service provided: one element of due diligence may lead you to ask for another.
For example, if you’re looking for a call center’s compliance policies and they refer to training materials, you’re likely going to need those as well.
3. The due diligence should be done pre-contract: at least as much as possible. That means well before the contract, not in a frantic effort to get things done to hit a supposed contract date.
There will be times that you cannot complete due diligence prior to the contract. Some items you may even have to contractually oblige them to provide, but make sure you document it and commit them to provide as soon as reasonably possible.
A few examples are things like evidence of audits, financials, and customer records – it’s understandable that they want to hold onto them but at the same time, if you need them, make sure the contract provides you the avenue to obtain them.
4. Must be timely, thorough and onoging:
If you need more information, we certainly can offer a vendor vetting package that includes some of the essential elements that you should consider with every third party, from articles of incorporation, to a reputation risk check, to a secretary of state check, and several other fundamental items.
So to recap…
Again, I’m Kay and thank you for watching! If you haven’t already, subscribe to the Third Party Thursday series.