Hiring a vendor without verifying criminal records, insurance and financial standing can result in poor work, fraud or lost money. It’s always a risk, but becomes even more so at 3 a.m. when there is a major plumbing issue and a new contractor is hired because a preferred, long-standing vendor can’t be reached.
Every day in single family property management, new vendor relationships are forged. But the problem, says RealPage Vendor Credentialing Vice President Tracy Castleman, is that vendors aren’t always fully vetted, which puts companies at risk.
A non-credentialed vendor may refuse to take responsibility for poor workmanship or damage, and the management company may have no recourse. But a comprehensive vendor credentialing program can help property managers avoid being left holding the bag.
Failing to stay on top of vendors can be hazardous
Castleman has over 15 years of experience specializing in the multifamily industry as a licensed risk manager, insurance agent and claims adjuster. She said property management professionals often make mistakes when assembling their vendor entourage. Typically, they just don’t ask enough questions or stay on top of vendor relationships or the necessary paperwork that includes certifications and insurance.
An informal poll in a recent Propertyware webcast, “Vendor Credentialing 101,” revealed that most respondents handle vendor credentialing internally, but 23 percent didn’t routinely check to verify their vendors’ insurance coverage.
Castleman wasn’t surprised by either statistic. She said that while managing vendor relationships within the company may sound like a good idea, it’s risky and laborious. A third-party vendor credentialing partner can provide a safety net and save time.
She also shared some of the most common mistakes regarding vendor credentialing. Once relationships are established, they tend to be forgotten and not reviewed. Additionally, communication usually falls through the cracks.
“The number one thing I see is a risk elimination versus risk management mindset,” Castleman said. “You need to understand that being in business in and of itself carries a certain level of risk, so you need to manage that risk.”
With RealPage® Vendor Credentialing, property managers can reduce risk and time through a cloud-based solution that delivers end-to-end vendor compliance and risk mitigation for single family and multifamily properties. Vendor credentialing is comprehensively managed, and more critical information about plumbers, electricians, HVAC professionals – anyone who performs a specific vendor service– is readily available for review. RealPage® Vendor Credentialing handles all the legwork and paperwork to ensure vendors meet company policies and standards.
Vendor credentialing protects owners, property managers
The platform, which is free and the largest database of its kind, is loaded with more than 135,000 vendors who specialize in property management.
The benefits of vendor credentialing can make a marked difference for single family property operators. A big one is finding new owners.
Castleman said that property management companies can differentiate themselves from competitors with vendor credentialing because prospective owners are more likely to onboard with a company that uses qualified and licensed vendors.
The risk of using a non-credentialed company is decreased, which protects owners as well as the property management company. Also, an established network of qualified vendors provides property managers expanded resources for knowledge, particularly when it comes to compliance for insurance and other protections.
Removing manual processes saves time
Another key is that the vendor network is always maintained and up-to-date and manual processes are removed. This is more important than at first glance, Castleman says. In a competitive job market like today, companies run a greater risk of losing key players. When they’re gone, vendor relationships can fade away.
Castleman says the right vendor credentialing package includes thorough vendor agreements, appropriate insurance, background screening, proper licensing and verification and verified W-9s.
Verifying insurance endorsements is a big feature. A policy may appear to fully cover a property, but if it doesn’t have specific endorsements it can put the management company at a disadvantage.
“If you are not collecting policy endorsements, that’s huge,” Castleman said. “That’s a red flag for me. It’s not enough to simply collect an endorsement, you need to evaluate the content of the endorsement to ensure that the coverage you are looking for is there and there isn’t an exclusion sitting there that will impact the coverage you are trying to achieve."
Background screening through criminal checks is also a must.
“You’re sending vendors into people’s homes, and you need to make sure you get the appropriate level of screening,” she said.
Six keys to finding the right vendor credentialing solution
Castleman said finding the right vendors is possible through the right software solution. It's important for it to offer these six things:
- A single point of reference
- The advantages of a powerful search engine that can narrow vendor choices
- Proof that vendors are licensed and insured
- Confirmation that vendors meet company requirements
- Ongoing vendor maintenance
- The ability to onboard quickly
The right vendor credentialing portal provides quick access to information, which allows properties to establish a verified network. And that can ultimately help grow doors.
For more insights, watch the webcast.