Performing due diligence with social enterprise suppliers

When thinking about bringing social enterprises into your organisation’s supply chain, there are a number of key questions you are likely to ask. Firstly, as with any supplier, can they deliver on what you need them to? For example, can they operate at scale or fulfill a particular contract? As social enterprises are businesses that exist to make a positive social or environmental difference, you’re also going to want to know what impact you will be making by buying from them. For instance, will you be helping to employ people who face barriers to work? Or, perhaps you will be reducing your environmental impact?

As with any supplier, you’ll be sure to perform some kind of audit to make sure that they are able to fill your requirements and address your needs. But this process can be tricky, particularly given the difficulty of verifying an organisation’s impact and confirming their status as a social enterprise. It can also be time-consuming.

According to an NCVO survey on public sector procurement, 30% of respondents said they spend more than four weeks per year completing PQQs and tenders. 70% of respondents stated that procurement procedures and paperwork have prevented their organisation from bidding for work.

At Supply Change every social enterprise on our platform has passed a careful due diligence process, having completed a detailed questionnaire to ensure they can meet a buyer's requirements. This onboarding process was developed after conducting an extensive User Research exercise with procurement teams of leading public sector organisations back when Supply Change first began. The resulting questionnaire strikes the necessary balance between providing comprehensive information for buyers, and usability for social enterprises in terms of making it as quick and easy as possible for them to complete.

We recently launched a new range of badges for our suppliers to use, which show that they have completed and passed this due diligence process.

If a supplier holds the badge and is featured on the Supply Change platform, it means that we’ve checked and verified the following:

• Basic company information to identify the business

This includes email verification, companies house number and significant person checks

• References

We require at least two references from previous, recent suppliers, ideally from a public sector buyer or similar. This also helps to inform how big a contract the supplier has carried out in the past.

• Financial Information and credit history

Through a third-party tool, we carry out a credit check of each supplier to obtain a reliable financial health check of our social suppliers.

• Social enterprise status

By looking at their company structure, articles of association, impact reports and any relevant memberships and certifications

• Key Company Policies and Insurances

We collect copies and declarations of the policies that the supplier holds. If policies are required in the future we can help suppliers to obtain these. We also collect insurance certificates to verify the level of insurance and make sure they are up-to-date.

• Trade Specific Certifications

Trade specific policies & insurance levels - for certain business areas, special insurance and trade policies are also required.

Our Trusted Supplier badge not only means the supplier has completed this due diligence process but that the information contained within it is also annually verified by the Supply Change team.

Due diligence processes such as this help to streamline procurement processes, whilst strengthening the social enterprise movement as a whole. They save time for both the supplier and the procurement team, and they build trust around the wider social economy through greater transparency and ease of access. The Supply Change platform allows buyers to conveniently access supplier information in one place, and with the confidence that all prospective organisations are pre-vetted and contract-ready. This has already allowed us to fast-track dozens of social suppliers onto public sector portals using our data, and to prepopulate supplier forms for buyers.

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Does your organisation need help performing due diligence on social suppliers?

Or do you run a social enterprise that’s looking for more exposure to potential buyers?

Get in touch with the team at hello@supplychange.org.uk to find out more.