Protect Your Business By Conducting Vendor Audits and Verifications
Entrepreneurial ventures are arguably some of the most stressful careers one could have, not to mention the exposure to risks like theft and fraud. Fortunately, CGA Solutions can alleviate the stress of those risks, so you can continue to focus on growth. Having experience in vendor auditing and criminal investigations, your business can be prepared to combat and prevent any potential threats to its success.
What Is a Vendor Verification?
We all know that it’s impractical to manufacture any product from raw materials to completion. There are some exceptions to that statement, but most products can’t be manufactured in full with the same company as it’s very inefficient and costly. With profit at the forefront of business priorities, any corporation will need to find the most cost efficient producer of their materials. This is where vendor verification plays a critical role.
So what exactly is vendor verification? In the simplest of terms, it’s the verification of a vendor’s credibility and reliability. Corporations are willing to pay millions of dollars if it means their manufacturing operations can run efficiently. Knowing how much is on the line, a business will take every precaution to ensure that the vendor they’ve trusted delivers the products that have been purchased.
This verification process is used to protect the business from risks that include:
- Fraudulent Suppliers
- Vendors That Can’t Keep Pace With Material Demands
- Unregulated Or Unlawful Suppliers
- Unprecedented Vendor Closures
Ensure Your Suppliers Are Up to Your Company’s Standards with a Vendor Audit
Every successful business conducts audits on every cog in their machine to make sure the operation runs smoothly and efficiently. An audit is essentially an extensive, detailed background check on an operation. This leads to verifying a supplier’s:
- Legal name
- Corporate Structure
- Business Statement
- Tax Information
- Risk Prevention Protocols
Having so many moving pieces in a business operation, it’s in everyone’s best interest to minimize potential risks. This is why an audit will include checks on some of the more detailed operations of a supplier, including:
- Staffing Qualifications
- Cost And Pricing Information
- Quality Management
- Maintenance Checks
- Vendor Supply Chain
- Financial Activity
- Purchase Tendencies
The more information you can glean from your business associates the better.
When the initial credibility is complete, you might think your work is finished, but that’s exactly what a fraudulent supplier preys on. To ensure your business operations run smoothly, you have to stay vigilant and make sure your suppliers continue to operate similarly to when you contracted with them. This requires you to ask for updates on the initial verification’s information.
Training administration to conduct audits can be beneficial in preventing fraud or theft. However, for a background investigation on a particular vendor, an investigation firm, such as CGA Solutions can ensure the suppliers you are working with are credible and reliable.
Organized Retail Crime Is On The Rise, and It’s Important to Protect Your Business
With economies and trade growing at a rapid rate, labor shortages are becoming a more common risk that businesses face. Whether it’s hiring out of desperation or disgruntled employees, these labor shortages can lead to attacks from organized retail theft operations. How does one protect themselves from such theft? It starts with recognizing opportunities your business may grant to would-be thieves.
[RELATED: Are Your Employees Stealing from the Company?]
Though not every attack is entirely preventable, especially externally, it’s important to keep your internal losses under control. The most common internal thefts would be through practices like:
- Theft by Conversion
Starting with skimming, a business may notice a loss in revenue and inventory without any accounting records to validate the losses. This is the result of an employee not registering a transaction and pocketing the sale for themselves. With vendors, they may charge for delivering products that were not included in the agreed delivery, pocketing that extra money for themselves.
Similarly, the practice of overcharging would abide by a similar principle but will result in more than financial losses. This method of theft is the result of an employee charging more than a service or product is worth and pocketing the principle made on the sale. Overcharging is immediately less noticeable as it will not be indicative in a company’s performance.
Going unchecked, overcharging practices will ruin the reputation and validity of a company. It can also ruin any future vendor relationships and even the trust of your customer base. With such a practice being employed, the importance of vendor audits is all the more relevant.
Theft by Conversion
Our last internal theft risk is theft by conversion. This is the result of an individual using company assets or funds for personal gain. Examples of this would be an employee leaving the company without returning their provided work computer or an individual renting a car without any intention of returning it at the end of the agreed rental period.
[RELATED: Theft By Conversion Explained]
In summary, tactics used to discourage internal theft would include:
- Employee background checks
- Employee training
- Monitoring business account
- Access internal surveillance
- High-value product security
It’s also important to note the morale of your employees in order to mitigate the desire to target your business.
Think Your Business Could Benefit from a Vendor Audit and/or Verification? Talk to the Experts
Bad vendors often take advantage of the vulnerabilities within an operation, such as individual stores or your supply chain, to steal company property for their personal profit. That is why we are here to help. If you’re in need of an audit or feel like your business is at risk for more than petty theft, CGA solutions can help.
Having professional experience in both areas, our investigation firm can root out any potential vendor fraud within your business operations throughout Georgia and South Carolina. For a free consultation, contact us at 866-217-8581.