Business Management: How to Work with Vendors and Borrowers

Lizzie Weakley

September 21, 2016


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While perhaps the most critical interaction a business has is with its customers, for certain businesses, interactions with vendors, borrowers or tenants is just as important. These interactions can play a big role in the success or failure of your business, as well as its reputation, so here are some good management tips for how to work with vendors and borrowers.

Make Sure Any Business You Work with Has Insurance

This is especially true for contractors or handymen, where they are performing potentially dangerous work. Insurance companies can make the decision of whether or not to file a personal injury lawsuit, so even if you trust the contractor, it's still important to have proof of insurance before scheduling work or your own company might end up with a lawsuit. Obtaining a copy of a vendor's certificate of insurance (COI) and keeping it on file is a must to work with independent vendors.

Get Bids

Whether your business is looking to complete an internal project, like a new phone tree system, or one of your clients needs work done, the best way to get a feel for cost and the scope of service is to ask for bids from a number of contractors. Most contractors jump at the opportunity to expand their client pool by working for another business and its clients, so they're usually happy to provide bids for you.

Employ a Service That Does Background Checks

If your business in any way rents or lends, doing background checks to ensure a client will pay and not be problematic can save your business a lot of money, time and headache. There are even services, like Tenant Credentialing Services, that analyze contracts and leases to determine the amount of insurance the borrower needs. It's simply good practice to always do some sort of tenant screening on both their insurance and background information to make sure they will be a good tenant to which to entrust your property.

Have Contracts and Make Sure Everyone Is on the Same Page

Contracts are a must for any joint business venture or rental agreement in order to protect both your business and the vendor or borrower. They provide a legal framework and binding agreement for what actions are to be taken. Contracts produced by your business should be drafted by or at least approved by a lawyer to avoid potential legal issues. It is also critically important to sit down with any vendor or borrower with which you do business to go over any agreements you've made and make sure each party is very clear on the terms of the agreement.

Be Willing to Fix Mistakes and Be Accommodating

While it's important for your business to have policies and rules and for you to stick to them, sometimes bending the rules is necessary in order to keep a good relationship with a vendor or client. Never try and deflect blame onto a vendor or client, even when a problem is their fault. Always handle interactions with them in a rational, professional manner, even if they do not react rationally or professionally. If the mistake was the fault of your business, do everything in your power to remedy it, even if that means some extra hours or a little bit of lost revenue. It's worth it to keep a good relationship with a good vendor or tenant and your reputation.

Don't Be Afraid to Let Vendors Go

If it is no longer in the best interests of your company to work with a vendor or borrower, execute escape clauses in your contracts and part ways. If they constantly do poor work, no longer can abide by a prerequisite for working with you (like providing adequate insurance), have been extremely rude, destructive of your property, can't pay rent after accommodations have been made or are generally not worth the effort, do not be afraid to cut them loose as soon as your business is legally able.

Managing a business is hard enough, but when other entities, such as vendors, borrowers or tenants come into the picture, things can get a lot more complicated. Hopefully these tips for how to work with vendors and borrowers as a business manager will help your business and make its dealings a lot smoother.