We have all heard about KYC, Know Your Customer and KYB, Know your Bank but it is equally important in the Corporates world to Know Your Vendor – KYV
In the business world people buy from people. We rely on people – our colleagues, customers, employees, vendors – so many people make the business world go round and when it comes to buying, we feel more assured if we know from whom we are buying. However, it is always an advantageous to implement proper process in addition to our reliance on people.
For Corporates, the process of selecting a reliable and committed vendor partner who not only has an in-depth understanding of their requirements but who is also able to deliver goods / services in a pre-agreed terms and time frame, can sometimes prove to be a real challenge. Lot of times, the vendors are on boarded without following due process. This can prove to be a fatal in the long run. We come across many examples of fund diversion / non-compliance of applicable laws and rules by vendors etc.
Advantages of implementing KYV
- Ensures that the vendor is complying with the applicable laws (eg : simple act of obtaining PAN/GSTIN details along with documentary proof ensures that the vendor is duly registered)
- Helps in prioritizing the payment schedule (specially after applicability of the MSME act whereby MSME vendor needs to be paid within 45 days)
- Helps in eliminating / minimizing the fund diversion risk (eg : once you start insisting on the cancelled cheque at the time of vendor registration, there are almost zero possibility of payment process to third party)
- Assists in audits.
How we can help you automate the KYV for your organization
We at ASAP Advisors have developed an automation tool for KYV compliance. The following flow chart gives brief about the process.
KYV – KNOW YOUR VENDOR
Reputation is most significant success factor in long term, and nothing tarnishes the reputation of a vendor faster than failure to deliver on a promise. Implementing KYV at organization level, selecting right vendors and working with the right set of vendors eco system also ensures that the company will be able to deliver on it’s promises for customers and become the preferred Vendor 😊