There's a question that every procurement professional needs to consider as they're developing and implementing compliance strategies: why should anyone outside of procurement care about compliance?
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As someone who works in procurement, the importance of compliance is clear to you. It helps mitigate risks, prevents legal issues, and keeps everything running smoothly. But for colleagues in other departments, the value of compliance initiatives might be obscure. In this guide, we'll explain why procurement compliance should matter to everyone in your organization. We'll also look at some compliance best practices and strategies to ensure your vendors are fully compliant with your policies.
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What does SaaS Compliance Mean in 2024?

SaaS procurement compliance involves ensuring that the acquisition and management of cloud-based software align with an organization's policies, industry regulations, and legal requirements. 
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Key aspects include:

— Due diligence: Evaluating vendors' financial stability, security practices, data privacy measures, and regulatory compliance.

— Contract negotiation: Defining SLAs, data protection, compliance responsibilities, and termination rights.

— Information security and data privacy: Ensuring vendors adhere to security standards and data privacy regulations.

— Vendor performance management: Monitoring SLAs and compliance, taking corrective action when necessary.

— Regulatory compliance: Complying with industry-specific regulations and data transfer requirements.

— Integration and interoperability: Assessing compatibility with existing IT infrastructure and other cloud services.

— Access management: Implementing access controls and user provisioning processes aligned with SaaS security policies.
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Why is Procurement Compliance Important Not Just For Procurement Teams?

Procurement compliance is not just a concern for the procurement department; it's a critical issue that should be on the radar of every employee in the organization. 
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Why? 

Non-compliance can have severe consequences that ripple throughout the entire company, affecting everything from financial stability to reputation and competitiveness.

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But it's not just about avoiding negative consequences – there are also positive reasons why every employee should care about procurement compliance. For one, compliance helps ensure that the company is getting the best value for its money. By following established policies and procedures, employees can help prevent overspending, and identify cost-saving opportunities. This, in turn, contributes to the overall financial health and competitiveness of the organization. Second, procurement compliance is essential for meeting legal and regulatory obligations. Today, companies are subject to a wide range of laws and regulations governing everything from cybersecurity and data privacy. Non-compliance can result in severe penalties, legal action, and reputational damage.

How to Ensure Your Vendors Are Fully Compliant with Your Policies

You can't predict every potential compliance issue that may arise with your vendors. Because as a procurement function, you're managing multiple vendor relationships at once.

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Simplify your vendor compliance with a seamless monitoring process

(This involves mapping out potential risk areas, interactions, and information sources that you use to assess vendor compliance.)

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Examples of key compliance monitoring touchpoints:

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- Due diligence questionnaires 

- Contract terms and conditions

- Vendor security assessments

- Ongoing performance reviews

- Procurement Compliance attestations and certifications

- Vendor audits

- Corrective action plans

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That's right, even routine interactions like performance reviews are a great opportunity to discuss and reinforce procurement compliance expectations. 

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Your vendors' actions are not completely in your control. However, their commitment to meeting your compliance standards is something you should actively monitor and influence.

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Once a vendor is onboarded, you need to ensure you have an effective process in place to continuously monitor their compliance. 

1. Establish clear compliance expectations from the start

Don't wait until an issue arises to clarify your procurement compliance policies. Your compliance expectations should be clearly defined and communicated to vendors from the very beginning of the relationship. Without setting clear expectations upfront, it could take weeks or months to identify and address potential non-compliance issues, by which time the risk exposure could be significant. 

2. Automate vendor risk assessments and ongoing monitoring 

Close to 60% of a procurement professional's time is spent on administrative tasks that don't directly contribute to risk mitigation, and doing vendor risk assessments manually is a major contributor. Only for a procurement compliance issue to emerge because of inconsistent ongoing monitoring. 

Vendor Risk Assessment Template

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At Spendflo, we leverage highly customized vendor risk assessment templates (like the one above) and automated workflows to continuously monitor vendor compliance across key procurement risk domains like information security, business continuity, regulatory requirements, and more. The same can be replicated for vendor performance management, where you track SLAs and KPIs to identify potential compliance issues. But when questions arise, having a collaborative platform to engage with vendors can help quickly investigate and remediate problems.

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Automate Your Vendor Evaluation With Spendflo Now!
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3. Address non-compliance promptly with corrective action plans

Vendors can sometimes be less than fully committed to your procurement compliance policies, especially if they perceive them as burdensome. Sometimes, it comes down to the right messaging and incentives to get them to embrace your compliance culture.
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A good way to handle minor procurement compliance deviations without damaging the vendor relationship? 

— Corrective action plans allow you to identify the issue in the procurement process, specify remediation steps, and constructively track the vendor's progress.

— For instance, are your SaaS data security requirements realistic for a small vendor with limited IT resources? Are you providing them with clear guidance on what they need to do? Make it a point to convey not just the "what" of procurement compliance but also the "why" and "how". 

— Spell out what's at stake in terms of risks to your business. If you have examples of how non-compliance has impacted you in the past, share those stories.

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The problem we're solving is important, but what about the effort required from the vendor to comply? Is it simple enough for them to adapt their processes? Answer this proactively in your vendor communications. Even better, if you have other similar vendors vouching for the reasonableness of your approach.

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Lastly, be transparent about Procurement compliance monitoring and enforcement. How much of the vendor's time and resources will be required to demonstrate compliance? Depending on the risk level, the effort required may vary.

But make it explicit upfront so you don't pull any surprises on your vendors later on. After all, procurement's role is to enable successful vendor partnerships while protecting the company from undue risk.

SaaS Procurement Compliance Best Practices

— Break down silos

Effective compliance management demands seamless collaboration between compliance, vendor management, and information security teams. Schedule bi-weekly sync-ups to align priorities, share insights, and tackle challenges head-on. Bring infosec experts to the table when assessing vendors' security measures and reviewing contracts.

— Conduct comprehensive policy reviews

Outdated policies are a ticking time bomb in the procurement compliance world. Block off time each quarter to meticulously review your data privacy, information security, and vendor management policies. Ensure they align with the latest industry-specific regulations, such as HIPAA, GDPR, PCI DSS, and CCPA.

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— Implement a risk-based audit program

In the high-stakes game of procurement compliance, audits are your ace in the hole. Develop a comprehensive, risk-based audit plan that targets your most vulnerable areas. Combine the power of internal audits and impartial third-party assessments to leave no blind spots.
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— Proactively identify and mitigate risks

Today, risk mitigation is non-negotiable. Conduct exhaustive risk assessments to pinpoint vulnerabilities lurking in your systems, processes, and vendor ecosystem. Leave no stone unturned.

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How Spendflo Helps Accelerate TPRA Eliminate Risks And Stay Compliant With Your Procurements

Spendflo streamlines the TPRA process by allowing you to initiate vendor risk assessments directly within the platform. 

Step 1: You provide details about the vendor, and Spendflo automatically generates a tailored risk assessment aligning with your organization's policies and the vendor's risk profile. 

Step 2: Assessments can then be efficiently assigned to relevant team members for input on areas like financials, security, business continuity, and more.

Step 3: As your team collaborates on the TPRA, Spendflo consolidates all risk data into a centralized dashboard, providing visibility into potential vulnerabilities before onboarding a vendor. 

Step 4: Any high-risk areas can be flagged for additional review or vendor clarification without disrupting workflows.

Step 5: Spendflo helps monitor for changes that could impact a vendor's risk profile. If a vendor's security rating declines or financial health deteriorates, you receive alerts to promptly reassess, ensuring risks don't go unnoticed.

Step 5: To support compliance, you can configure your procurement policies within Spendflo. The platform then automatically enforces these rules across contracts, purchase orders, and spending activities. It prevents violations like unauthorized spending or engaging with non-vetted vendors. Comprehensive audit trails and approval workflows are built-in.

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Automate your Procurement Compliance Evaluation With Spendflo