Why Is Vendor Offboarding Crucial For Organisation Security?

Posted by CRMJetty on August 21st, 2023

Business is all about making new connections and turning them into valuable customers. But it comes with so many risks because you never know when vendors will turn into enemies. Vendor management is important to keep an eye on new suppliers to ensure smooth business; whether it is a small business contract or a big one, it's important to handle the onboarding and offboarding process smartly to prevent data loss of the company. 

In this article, you will explore vendor offboarding, the risks of vendor offboarding and best practices for offboarding to carry out your business safely at every stage. 

What is vendor offboarding?

After the business contract is completely over, the vendors are removed from all finance and administrative database records to prevent data misuse, reputation damage and other business threats. To prevent sensitive information of business, one must carry vendor offboarding properly and end the contract on a good note. 

What are the risks while offboarding vendors?

Vendor management is crucial to maintain a healthy business, so you must pay attention to offboarding in order to have good relations with the client in future. There are mainly four types of risks that are as follows:

Cyber risk

It could lead to unauthorized access, data breaches and various other types of cyberattacks. Hence, you should completely remove access to third-party vendors or suppliers to prevent important data exposure.

Financial risk

There might be ups and downs in the business, like vendors may have negotiated for early termination or business deals, and it ended up causing problems. A bad ending with vendor relationships can lead to certain financial losses, which might not be good for the business. 

Legal risk

It can also cause problems regarding property disputes if the legal department of the company has not analyzed the negotiation and development. Make sure you end the contractual agreements between the parties with mutual understanding.

Reputation risk

You must maintain a good relationship with a third-party vendor after ending the contract to keep a good reputation in the market. Getting rumored by the Vendor may have a negative impact on the coming future Vendor and impression of the company.

Best practices for vendor onboarding 

Stay in touch in future for updates

Having clear and transparent communication is important in every business to maintain a good image in the market. Stay connected with terminated vendors even after the contract is over so you can sort out the issues related to any workflow, if any, in future. 

Final contract review

Every business has its own terms and conditions for handling offboarding vendors, but you must carry everything with a legal procedure to avoid future hassles.

Clear all invoices on time

Review and study all the contracts from both parties and settle all the pending invoices after you get your work done completely. Don't forget to add any credits or deductions in the payment because it can be difficult to get once you are done with the offboarding process. 

Terminate access to data and physical building both

Maintain a proper list of Vendor accounts to delete their credentials and other access to the property and company data. Ask them to return any company equipment or deliverables to preserve the safety and peace of the business. Remove access from the cloud or any VPN apps to prevent file sharing and data retention.

Review and update data privacy and information security compliance

If the terminated Vendor has a copy of any of the sensitive data, it could lead to a data breach or any other misuse. It's important for the data research team to review and update the data privacy norms and other authorisations to add an extra layer of security. 


Nowadays, business totally depends on outside vendors; hence the offboarding process has become an important part of every business. If you own a heavy business, then prioritize your vendor's management process to prevent data breaches and business disruption. It's crucial to act smart and friendly both at the time of the offboarding process in order to maintain the security and integrity of the business.

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