In recent months, ABC-Amega has received more Request for Proposals (RFPs) and vendor security questionnaires than usual. This uptick prompted me to explore what might be causing companies to issue these assessments in 2023.
It’s common knowledge that RFPs are a structured way for businesses to solicit bids from potential vendors or service providers. They typically outline the requirements and specifications for a project or service, and vendors respond with proposals detailing how they would meet those requirements and the associated costs.
Companies issue RFPs for a variety of reasons, including:
- To obtain the best price and quality for the goods or services they need.
- To establish a competitive bidding process that encourages vendors to offer their best possible pricing and solutions.
- To ensure that vendors meet specific quality, safety, or security requirements.
Issuing an RFP to collection agencies can be an effective way for a company to get current on their past due commercial accounts receivable, in addition to helping improve cash flow and protect working capital.
Are companies issuing more RFPs because of the current volatility in the global economy? Is inflation putting greater financial pressure on organizations to increase liquidity?
A recent survey by a global fintech provider of working capital management solutions indicates that half of the businesses they polled regularly receive past-due customer payments. However, a UK-based accounts receivable automation software provider reports that this number is more significant and that over 85% of companies report being paid late.
The threat of a global recession still looms overhead, and commercial bankruptcy rates continue to rise. Therefore, it’s prudent for companies to pay close attention to their aging A/R and devise plans to allocate resources to focus on collecting past-due accounts.
It’s safe to say the answer to both of the rhetorical questions above is “Yes.”
Internal plans for tackling delinquent customer accounts require investments in staff, training, and possibly accounts receivable software. However, working with a commercial collection agency would be a simpler, lower-cost alternative.
The longer a business holds onto overdue receivables, the less likely it will receive payment in full. Hiring additional employees or outsourcing the work to a third party may be necessary for effective debt collection efforts. Working with a commercial debt collection agency will ensure your accounts receive the attention they need for successful debt recovery.
While commercial debt collection activities aren’t regulated like consumer collections, businesses can further secure their interests by only working with a certified commercial debt collection agency. The leading organizations for commercial collection agency certification are the Commercial Law League of America (CLLA), which works in partnership with the International Association of Commercial Collectors (IACC), and the Commercial Collection Agencies of America (CCA of A). Certification from these entities ensures that the agency you work with adheres to a strict code of ethics, financial and process procedure reviews, and maintains proper bond coverage. Furthermore, the CCA of A offers a certification program for commercial debt collection representatives.
Collection agencies should have appropriate insurance coverage for data protection and cybersecurity. They must also adhere to the data privacy policies where their clients’ customers are located, including GPPR and CCPA.
New and emerging data privacy rules and regulations contribute to the increase in vendor security questionnaires.
Companies have a responsibility to not only ensure their own data compliance but also to make sure their vendors are compliant. In addition to RFPs, vendor security questionnaires are a tool businesses use to evaluate the security practices of potential vendors. These questionnaires typically ask vendors to provide information about their security policies, procedures, and technologies and may be used to assess the vendor’s overall security posture.
Businesses issue vendor security questionnaires for the following reasons:
- To ensure that vendors are adequately protecting sensitive data or intellectual property.
- To comply with industry or regulatory requirements related to data privacy or security.
- To reduce the risk of a data breach or other security incident that could impact the business or its customers.
A single data breach can cost a company $10 million or more, and it often takes over nine months for such a violation to be identified and contained. Therefore, organizations must prioritize data security and implement risk mitigation measures to prevent possible financial and reputational damage from such data security incidents.
Data protection must be a constant focus for businesses to operate safely and securely in the global marketplace. As a result, organizations should prioritize assessing security measures internally and across all vendor relationships.
It’s no small task to issue an RFP or Vendor Security Assessment, but there are solutions to help make the process run efficiently.
Several cloud-based platforms are available to help organizations manage RFPs and related vendor security projects. Companies can ensure their vendors operate up to their standards by asking the right questions and following structured assessment procedures.
Here are some of the systems we’ve interacted with at ABC-Amega:
- Coupa: a cloud-based platform that helps businesses manage spend and streamline procurement processes, including sourcing and supplier onboarding.
- GEP: a cloud-based procurement platform that helps businesses manage sourcing, procurement, and payments.
- Jaggaer: a cloud-based procurement platform that helps businesses manage sourcing, procurement, and payments.
- SAP Ariba: a cloud-based procurement and supply chain management platform that helps businesses manage sourcing, procurement, and payments.
- Scout RFP: a cloud-based platform that helps businesses manage sourcing and supplier onboarding.
It’s worth noting that there are many other systems available for managing vendor sourcing, RFPs, onboarding, and security questionnaires. Of course, the best system for a particular business will depend on the organization’s specific needs, requirements, and the resources they have to manage the assessment process.
Whether or not the number of RFPs and vendor security questionnaires that companies issue in 2023 will increase is yet to be determined. It will depend on various factors, including the state of the global economy, changing regulatory requirements, and evolving security threats. However, businesses will likely continue to use these tools to ensure that they get the best possible value from their vendors while protecting their customer data and intellectual property.
Check out these other Business Operations articles on our website.
To learn more about our credit and collections services, contact us at 844.937.3268 today!