Vendor Risk Management

What is a Vendor Compliance Review?

Evaluating the relationship between your company and your vendors is a critical step in the Vendor Management process. Prudent operators will exercise their rights to evaluate that relationship through a Vendor Compliance Review to determine whether the vendor is in compliance with the terms and conditions of the applicable Master Service Agreement (MSA). These reviews can result in both monetary and non-monetary findings and answer the following questions:

1. Are services billed reflective of actual services rendered?
2. Were materials billed at the delivered quantities?
3. Are prices compliant with governing purchase orders, work orders, or other pricing agreements?
4. Are vendors aware of company policies and procedures or are conflicts of interest present?
5. Does the vendor carry insurance, per stipulations in the MSA?
6. Are proper controls in place to detect and prevent future overbillings and fraud?

What is Vendor Risk Management?

Managing vendor risk can differ based on the size of you company, the sophistication of controls in place, the reliance on third-party verification, etc.  A Vendor Risk Evaluation begins with interviews with key personnel in the procure-to-pay process, evaluation of Vendor Management controls, as well as targeted testing to determine your company’s risk level. An Evaluation may also include a review of vendor onboarding procedures and controls, purchase order controls and verification, your vendor oversight process, and your company’s ethics and hotline program.  Overall, the objective of a Vendor Risk Evaluation is to enhance or establish your control environment to mitigate future overbillings and reduce your fraud exposure profile.

What is Martindale’s approach?

Martindale takes a risk-based approach to Vendor Compliance Reviews. We begin by evaluating your MSAs, rate sheets, and billing detail to gain an understanding of the potential risk areas. This process is followed by stakeholder interviews with key company employees to gain a better understanding of what services or goods the vendor provides, as well as any potential relationship issues. Finally, we schedule time to talk through processes and policies with your vendor. In sum, this information is analyzed to identify the areas of highest risks.

The heart of our review is fieldwork. During this stage, our goal is to review, identify, and validate Vendor Compliance with the following:

• Company’s Policies and Procedures
• Executed Contracts and Agreements
• Executed Rate Sheets and Billing Best Practices

Communication is key to our relationship. It is imperative that Clients are in the know when it comes to our budget, our progress, and any potential findings. In fact, if we identify areas of attention, you are the first to know.

Drawing on our deep vendor-risk experience and expertise, we conclude our work with an actionable report that provides stakeholders with findings and potential recommendations and action plans.

What sets Martindale apart?

There are many models and strategies out there when hiring a third-party to conduct vendor compliance reviews. 

Martindale separates ourselves apart from other firms by focusing on key principles:

1. We seek to identify the root cause or underlying issue that causes an overbilling or control weakness and present solutions to resolve the issue going forward.
2. We treat our projects as if they are our own.  We understand vendors play an important role in your operations and we approach each project respecting the relationship between the operator and vendor.  We bring professionalism and are discreet when necessary.