Business inefficiencies exist in almost every market, wasting resources and, more importantly, missed income opportunities. With over 32.5 million small businesses in the United States, business owners have no time to waste and must look for ways to reduce credit risk while increasing income to achieve overall business success. However, due to its tedious nature, one growth path that is often overlooked is business auditing.
Small businesses spend an average of 17 days a year checking and rechecking on everything from loan applications to new leases, insurance policies and even new supplier agreements, wasting time and money. for each check. These problems are then compounded when small businesses wish to work with large corporate clients. It takes even more time and effort, which often results in large companies working with larger, less time-consuming vendors that appear to be less risky on the surface.
For small businesses, especially when dealing with their supply chains, verifying suppliers is essential to mitigate operational risk. However, small businesses rarely perform supplier verification and monitoring due to expensive and demanding processes and a lack of access to effective solutions with objective information. With supply chain disruptions, like the COVID-19 pandemic, which has caused nearly 60% of suppliers fail Over the past year, small businesses can waste valuable time and money trying to find verified and reliable suppliers, which will ultimately lead to riskier partnerships.
To mitigate this risk and save time and money, let’s take a look at the verification process, both during verification and verifying your suppliers, and how streamlining the process can help your business team up with the right suppliers. .
- Consolidate your main documents for verification. Companies are typically asked to provide 7-10 essential items to verify their authenticity during the verification process. These elements can include ownership agreements, business licenses, employer identification number (EIN), etc. To streamline verification, this information and documents should be scanned and stored securely in one place for easy access. It is also important to ensure that these documents are kept up to date. For more efficient storage and accessibility, solutions are emerging to retain these documents, verify them and tokenize them so that they can be shared securely and easily for verification.
- Improve your credibility and confidence, as well as that of your partner. Each company’s vendor audit management process is a little different. However, before signing a contract with a new supplier or wholesaler, companies should confirm some basic details, such as legal company name and address, ownership structure, articles of association, tax information, licenses. , credentials and permits, among others. In addition to identity verification, it is also necessary to examine customer due diligence checks such as Know Your Business (KYB), Know Your Customer (KYC) and Anti-Money Laundering (AML ), as well as corporate credit ratings, to limit the risk of supply chain disruption.
- Watch for changes that can impact credibility. Once a partnership is established, the need to control suppliers in the supply chain does not end. We recommend that you continue with the Supplier Verification process throughout your relationship with the seller or wholesaler. It is important to regularly monitor your partners for impacts such as change of owner, workers, location or other conditions (fraud, non-delivery, late payment, cessation of activity, etc.) as those – these can dramatically influence your supply chain and potentially even your business.
- Check all your suppliers, existing and new. Today more 119 million businesses have been verified. Now is the time to get businesses into the verification process. Make a list of the people you do business with so that you can be notified of any change in status, which will help reduce and manage risk. Additionally, businesses can improve their cash flow by using the verification process, which allows them to weed out fraudulent businesses and receive payments on time.
In today’s world, trust is essential for small businesses. Knowing that a business is trustworthy, that its suppliers are genuine and reliable, and that the business can defend itself against supplier fraud, supply chain disruptions and other inefficiencies is vital for every business owner. small business. Although the process can be laborious, small businesses can use the verification process to develop their customer base, manage their suppliers, improve their cash flow, and overall create a network of trust for their business.
So while business inefficiencies exist everywhere, especially in small businesses, there are several simple ways to reduce credit risk, increase revenue, and strengthen your business. Every business, regardless of size, should consider these important factors during the verification process to see if there are opportunities to streamline the process and strengthen your operations.
Written by Hany Fam.
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