When I talk with clients and networking partners, they often bring up a costly problem – finding out the hard way that a vendor they depended on did not deliver as promised. I’ve heard so many examples: The accountant who didn’t keep the books. The IT technician who didn’t fix the computer. The supplier who shipped the materials late.
Outsourcing can be great but it comes with risks. Vendors who don’t perform waste your time and money, and damage your reputation.
Here are the four simple and cost-effective steps I advise to clients for staying on top of vendor performance:
Avoid surprises and misunderstandings by documenting your performance expectations in a vendor agreement. The document should address performance that drives the essential success factors for your business, such as specific results, quantity, quality, and due dates.
“Trust but verify” should be your mantra for verifying expectations are met. For goods that you purchase, verify that you received, in usable condition, the quantity that was ordered and invoiced. For services, verify that they were provided before paying the invoice.
You can’t look at every detail, but it’s a good idea for your vendors to know you are paying attention. Invoices from new vendors should be reviewed in detail to ensure that prices and other terms are accurate. Periodically review invoices from vendors you’ve used for a while, just in case there’s a slip-up.
Spot checking doesn’t replace knowing your vendors and communicating with them. If something changes or doesn’t seem “right”, you should ask why and follow-up if the answer doesn’t make sense. Ignoring red flags could cost you money and your reputation.
Using my advice, businesses can overcome their fear of being let down or taken advantage of by vendors who do not deliver. We all need help. It’s worth the time and attention to make sure the help you pay for is delivered.