Vendor Screening Services vs Due Diligence

Vendor screening services do not screen the vendor corporate entity itself, but the employees those vendors hire, employees who will have access to your facilities, systems, and confidential information. The process screens individual employees of your contracted vendor. Since you did not select or background screen the employee yourself, a vendor screening program will use your criteria for a background check. Depending on the program you design, the vendor screening services are as lax or as vigorous as you choose, including but not limited to criminal history searches, credit reports, drug testing, and education and employment verifications. For a complete list of potential services for a vendor background check, visit here.

This is different than due diligence, which is a screening of the company as a corporate entity itself. Whereas vendor screening vets the individuals you’ll be working with, due diligence verifies information about the company as a whole. Rather than simply checking Google reviews and moving forward with your relationship, a due diligence report will dig deeper in order to:

• review the company’s business credit
• complete an on-site inspection
• run an incorporation check with the Secretary of State
• cross reference name, phone, and address
• check the company’s Dun & Bradstreet report

With our access to the necessary data sources to run a complete report, we can provide this extra information to our clients, creating a comprehensive due diligence report.

In order to mitigate risk, you should perform both an extensive due diligence report and develop the right vendor screening program. A background screening company remains your best source for accurate information for both. Vendor screening programs remain a key factor in the overall safety of your company.

Outsourcing work could mean you are exposing your company to internal threats, for example, people who have access to your facility or your website, which means unscreened individuals could not only harm your employees but your brand. On average, 80% of all businesses run background checks on their employees, which leaves 20% unaccounted for. That means that 1 out of 5 companies you do business with potentially expose your business to dangerous and costly risks. With markets transitioning to value specialization over generalization, the need for vendors rises as the risk remains so high. The necessity for vendor screening services is growing rapidly.

InfoMart collects the necessary due diligence information for every vendor we onboard as a standard business practice alongside our vendor screening procedures.

Without access to the right data sources, the necessary experience to know where to look for information and how to obtain it in a timely manner, or the network of contacts needed to ensure a complete picture, the risks far outweigh any rewards received for compiling the information yourself. Be aware of the differences in nomenclature between the two processes, and consider your best sources for both.