Industry experts argue that businesses must put in place quantifiable contract compliance metrics and systems to achieve the types of savings opportunities that best-in-class organizations realize daily.
The best-automated compliance solutions, those specially designed to replace those spreadsheets, can evolve into a single resource for your compliance group and your organization.
Automated compliance solutions provide you with peace of mind by tracking all compliance activity in one place: regulations, policies, standards, contracts, and clauses that may have once resided within Word documents, or worse, in some binder that’s carefully guarded because no one knows what happened to the electronic version of the files.
Contract Provisions and Considerations
Contracts should clearly specify the details of the third-party vendor business relationship. The contract needs to establish a common understanding between the institution and the third-party vendor as to what needs to be achieved and should (1) define all deliverables, service levels, and metrics; (2) define responsibilities and obligations; (3) define terms and conditions; (4) specify how risk will be allocated between parties; and (5) define legal counsel and jurisdiction stipulations.
Also, contracts should clearly define the rights and responsibilities of each party, including:
- support, maintenance, and customer service
- contract time frames
- compliance with applicable laws, regulations, and regulatory guidance
- training of financial institution employees
- the ability to subcontract services
- information security and cybersecurity (including access controls)
- the distribution of any required statements or disclosures to the financial institution’s customers
- insurance coverage requirements and
- terms governing the use of the financial institution’s property, equipment, and staff.
Contracts must establish third-party vendors’ responsibilities to meet or exceed specific security standards or guidelines. SLAs can specify monitoring and audit processes, including performance measures for businesses to use to assess a third-party vendor’s performance concerning meeting security and other performance expectations.
Compliance, audit, risk management, information security, and business continuity functions should also be involved in reviewing contracts. Unfortunately, examiners have seen contracts that have not been executed properly. This typically happens when an institution is under time constraints to change third-party vendors and needs to follow an aggressive conversion time frame to end the relationship with its previous vendor.
Vendor Management implementation manages business contractual compliance, which includes standardization of all billing processes. This process includes bill rate standardization, terms, conditions, clauses, and overall management. Once you have a supplier active in a vendor management system, you can track and measure performance against the contract to ensure that the company is meeting your needs and complying with your requirements.
Eliminating purchases made within an organization that is not in compliance with negotiated contract terms reduces wastes and can reduce costs. Structured vendor management implementation results in vendor fraud reduction and has an immediate impact on vendor processes and visibility into unnecessary spending. Quantifiable measurements for compliance help to identify these under-performing segments, and assist in the consolidation of vendors where possible.
There’s is a level of assurance that comes when you’re able to connect and compare the data delivered from your compliance efforts with relevant information gathered by other groups like Internal Controls or Internal Audit teams. Having information available when, where, and how you want it can be invaluable.
Key performance indicators should go beyond assigning a pass/fail grade on a compliance report or evidence that a new technology promising better data security has been successfully implemented. When an organization has effective technology and devotes the time to designing the right KPIs, this is a start to identifying areas where security can be improved, as well as making it easier to demonstrate compliance.
When you’re looking for evidence to support compliance, for example, you can use automated compliance solutions to look up the latest standards and expectations surrounding certifications, inspections, and licensing.
You’ll also be able to access related internal audit findings, so you can invest your time developing the data needed to compose your reports, rather than sifting through the noise of conversations, notes, emails, and Excel spreadsheets.
There are a lot of procedures, habits, and tools you can develop on your own to track your compliance procedures and results, but wouldn’t you rather put that time into managing your team, and improving your procedures?
VENDOR MANAGEMENT SOLUTIONS
Our Vendor Management Solution (VMS) is a discipline that enables businesses to not only cut costs but also: control expenses, drive service excellence, and mitigate risks… while gaining increased visibility and value from their vendors. Through LIMITLESS’s on-line software overall vendor management, as well as – vendor expense management, is accomplished by giving you absolute visibility into your vendors and spend. No matter what the vendor or type of service they provide – companies can have a comprehensive view into their: services, contracts, rates, terms, conditions and spends through this sophisticated web-based solution.
If you have questions about any of our VMS benefits contact us today at 866-504-4050 to learn more about our Vendor Management Solutions.