It is important to hire and retain third-party vendors to keep your property management company up and running. Vendors like landscapers, plumbers, and electricians are imperative for the day-to-day operations of your properties. While vendor work is essential for your properties, it is of the utmost importance to make sure they are in compliance in order to protect your management company.
1. Know the Vendor You’re Working With
Do you conduct background checks on your vendors? Surprisingly, many vendors are welcomed onto properties without a proper background screening, enabling individuals with criminal histories to be hired for on-site work. If you don’t perform background checks your vendors, then you can’t make an informed decision on whether or not to allow them access to your properties.
As many as 75% of hiring managers state that a non-violent felony would weigh heavily on their hiring decision. For violent felonies, 100% said that would significantly affect their decision to hire.
Hiring vendors without first conducting a background check puts not only your company at risk, but your residents as well. It’s better to be safe than sorry and take the extra step to ensure you know who you’re working with.
2. Protect Your Company Against Lawsuits
Something as simple as a vendor’s slip and fall could dramatically damage your company. Slip and fall damages account for about 10% of all business liability claims. It’s crucial that your vendors list your management company as an Additional Insured on their General Liability policy. According to The Hartford, roughly 35% of general liability claims result in a lawsuit.
Regularly and consistently ensure that your vendors’ insurance is up-to-date, has proper limits, and has Additional Insured coverage. Without obtaining and verifying your vendors’ certificates of insurance (COI), you are putting your company at risk for a lawsuit.
3. Avoid TIN Mismatch Fees
Tax ID Numbers (TIN) checks are imperative if you want to protect your company from unnecessary fees. When you file 1099 forms with TIN errors, your company gets charged for mismatches, which can get expensive. Therefore, simply collecting a W9 from your vendors is not enough to protect your company. Each EIN or SSN and Government Name on the W9 should be TIN checked to ensure that the vendor filled out their W9 correctly and to make certain that they are a registered business with the IRS. If you don’t TIN check your vendors, you are at risk of being charged by the IRS.
4. Implement Tools/Services to Ensure Vendor Compliance
While vendor compliance is of the utmost importance, management companies want their property managers to focus on leasing apartments and retaining residents. Vendor compliance is often not considered a top priority since running screenings on these providers doesn’t produce income, but it does cost employees valuable time to contact vendors to obtain their COIs and other insurance documents.
NetVendor is a vendor-insurance-tracking service that integrates seamlessly with Rent Manager to help you save time and money— while protecting your company, at no cost to your management company. They also run TIN checks on W9s as well as background screenings. NetVendor prides themselves on their proprietary technology which allows you to focus on running your business, instead of chasing paper and worrying about non-compliant vendors.