The Case for Automating Third-Party Risk Management: Costs, Risks, and ROI
It's time to make the shift.
by Ashley Poynter
Content Manager
PaymentWorksThe Case for Automating Third-Party Risk Management: Costs, Risks, and ROI
Few modern businesses could exist without third-party vendors. From contractors and consultants to tech providers and facilities partners, organizations rely on a vast and growing network of outside entities to operate and compete. But with that growth comes increased risk, especially when the management of third-party relationships is still largely manual.
In 2025, procurement, finance, and compliance teams are being asked to juggle more than ever: an expanding vendor base, shrinking budgets, rising expectations for compliance, and an escalating threat landscape. And the cracks in outdated processes are starting to show.
This article is your practical guide to understanding the real cost of managing vendor risk manually, the dangers that come with it, and the tangible returns organizations are seeing by automating third-party risk management. Whether you’re a procurement lead, CFO, risk manager, or IT security professional, this piece is designed to help you evaluate your current process and envision a better way forward.
Table of Contents
What Manual Third-Party Risk Management Really Costs
The Risks of Keeping Things Manual
Why Now? What’s Driving the Need for Automating Third-Party Risk Management
The ROI of Automating Third-Party Risk Management
What to Look For in an Automated Third-Party Risk Management Solution
Automated Third-Party Risk Management Solutions: More Than an Upgrade
Get Ready for Vendor Management Day 2025
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What Manual Third-Party Risk Management Really Costs
You may not see it line-itemed on your budget, but the cost of managing vendor risk manually is significant and compounding.
Time drain on staff
Procurement and AP teams often find themselves buried in repetitive, low-value tasks: chasing down vendor W-9s over email, following up for missing banking info, manually reviewing forms for accuracy, and verifying identities using Google searches or outdated spreadsheets. It’s not uncommon for a single supplier onboarding to require a dozen email threads, multiple phone calls, and a manual sign-off process across departments.
Slow onboarding
Manual workflows delay vendor onboarding, which in turn delays project kickoffs, product rollouts, and payments. A three-week wait for bank account validation can frustrate internal stakeholders, damage vendor relationships, and make your organization look disorganized or high-friction to do business with.
Inconsistent processes
Without a centralized system, departments often create their own workarounds. One team uses a SharePoint form; another collects data via email; a third relies on a spreadsheet someone built years ago. This patchwork approach leads to incomplete records and gaps in oversight.
Error-prone workflows
Manual processes increase the likelihood of data entry errors, missed compliance steps, or even the onboarding of bad actors. A vendor might slip through without OFAC screening or submit an outdated W-9, putting your organization at risk without anyone realizing it until it’s too late.
Real-World Example: A client recently discovered that a vendor they’d worked with for months had never been properly screened against sanctions lists because the team assumed someone else had done it. There was no single point of accountability.
The Risks of Keeping Things Manual
If the costs weren’t reason enough, the risks of manual vendor management are far more sobering. Every disconnected process or manual step is a new attack surface—and a missed opportunity for protection.
Financial loss
The rise in business email compromise (BEC) and fraudulent vendor requests is no longer hypothetical—it’s a daily reality. Fraudsters are getting smarter, often impersonating real vendors or exploiting weak internal controls to reroute payments. Speaking of internal controls, Tom Rogers of Vendor Centric asks a critical question: who has time for fraud prevention on an already full vendor management plate?
Compliance gaps
Manual workflows often result in missing or outdated documents, like expired W-9s, unverified TINs, or skipped sanctions screenings. These gaps can lead to regulatory penalties or failed audits. With new rules like Nacha’s risk-based processing coming into play, the stakes are only rising.
Reputational damage
Mistakes in vendor due diligence can damage trust with customers and stakeholders. A missed red flag could lead to payments to a vendor with a criminal background, or one that later collapses, leaving your project in limbo.
Lack of audit readiness
When auditors come knocking, can you quickly pull up a vendor’s onboarding record, compliance history, and documentation trail? If your system is a mix of PDFs, emails, and spreadsheets, the answer is probably no.
Burnout and turnover
Manual work wastes time. It wears people out. It hurts morale. Staff frustration grows when they spend hours tracking down missing documents or redoing tasks due to errors. Burnout leads to turnover, and turnover leads to even more process breakdowns.
Every manual step introduces risk. And as your vendor ecosystem grows, those risks multiply. Fast.
Why Now? What’s Driving the Need for Automating Third-Party Risk Management
The risks and inefficiencies of manual third-party risk management have always existed, but several factors are turning this from an operational headache into a strategic imperative.
Rising regulatory complexity
From ESG disclosures and data privacy laws to Nacha’s new rule changes, the compliance landscape in 2025 is tougher than ever. Each new regulation adds complexity, and manual processes can’t scale to meet them.
Decentralized teams, decentralized processes
Hybrid and remote work have spread procurement and finance functions across locations and time zones. Without centralized systems, process sprawl is inevitable.
Budget pressures
Most finance and procurement teams are being asked to do more with less. That means automation is no longer a luxury—it’s a requirement to stay efficient and competitive.
Higher expectations for transparency and security
Executives, boards, and regulators now expect full visibility into vendor risk management. Stakeholders want to know: Who are we paying? Why? Are they compliant? Are they secure?
Evolving fraud tactics
Fraudsters are using deepfakes, social engineering, and spoofed domains to trick even the most cautious teams. Manual checks can’t keep up with this level of sophistication.
This is your wake-up call: What worked in 2020—or even 2023—simply doesn’t cut it today.
The ROI of Automating Third-Party Risk Management
While the initial driver for automation is often risk reduction, the true return on investment goes much further. Automating third-party risk management creates value across departments and across the vendor lifecycle.
1. Time savings
Automated workflows eliminate the need for repetitive email follow-ups, document chasing, and manual compliance checks. One PaymentWorks client cut vendor onboarding time by 60%—freeing staff to focus on strategic tasks, not spreadsheet triage.
2. Lower fraud exposure
With built-in identity and bank account verification, automation ensures every vendor is who they say they are. Real-time monitoring and consistent controls stop fraud before it starts.
3. Faster onboarding
Suppliers can self-register through a secure portal with clear instructions and built-in checks. Faster onboarding = faster time-to-value and happier stakeholders.
4. Stronger audit trails
Every action is logged, permissioned, and searchable. No more scrambling to find old emails or verify what steps were taken—your audit prep is built-in, not bolted on.
5. Better vendor experience
Vendors appreciate a smooth, secure onboarding process. No more PDF forms or clunky portals. A professional first impression builds better relationships from day one.
6. Reduced employee burnout
Fewer tedious tasks means happier, more productive employees—and better retention. High-value teams shouldn’t spend their time fixing typos or chasing down missing tax IDs.
What to Look For in an Automated Third-Party Risk Management Solution
Not all automation is created equal. In fact, many organizations invest in tools that promise efficiency but fall short of addressing the true complexity and risk of third-party management. When you’re evaluating solutions to automate this critical area of your operations, it’s essential to focus on capabilities that go beyond digitizing your current process. Solutions should meaningfully reduce risk, increase visibility, and improve internal confidence.
Here’s what to look for in a purpose-built platform:
Secure, centralized onboarding
A secure, centralized portal where all third-party vendors go to submit their information. The platform should support customizable workflows based on vendor type, risk profile, or payment method, and include permissioned access so only the right people can view or approve sensitive data.
The benefit: You’ll eliminate email back-and-forth, enforce standardized processes, and get complete visibility across your entire vendor base from day one.
Built-in compliance checks
OFAC screening, IRS TIN matching, W-9/W-8 collection, and validations against sanctions and watchlists should be embedded directly into your workflows. The platform should also log when and how checks were performed, and alert you to any discrepancies or failures in real time.
The benefit: You’ll always be compliant and audit-ready with minimal lift from your team.
Bank account and identity validation
A platform that performs both identity verification (e.g., confirming that the contact is a legitimate representative of the business) and bank account validation (e.g., matching ownership records with submitted information). These checks should happen before a vendor is onboarded rather than after money has changed hands.
The benefit: You’ll get peace of mind that you’re paying the right entity (and not lining a fraudster’s pockets!).
Risk alerts and continuous monitoring
Real-time alerts for changes in a vendor’s status, such as new sanctions, ownership shifts, or expired documentation. Look for tools that track these changes automatically and provide timely notifications to the appropriate internal teams.
The benefit: Proactive risk management, not reactive damage control.
ERP integration
Out-of-the-box integrations with popular ERP platforms (Oracle, Workday, SAP, etc.), along with flexible API options. The system should enable direct data sync to avoid double entry, reduce human error, and streamline cross-departmental collaboration.
The benefit: Stronger data integrity, faster operations, and fewer “we’ll get back to you” delays.
Clear audit trails
Automatic tracking and timestamping of every action taken in the onboarding and risk evaluation process. The system should allow for easy export of activity logs, forms, and approvals, creating a single source of truth for vendor history.
The benefit: No more scrambling for records. You’re prepared for audits, confident in compliance, and backed by documentation.
Pro Tip: Beware the patchwork. Piecing together spreadsheets, shared drives, and generic e-signature tools might feel like automation, but it still leaves gaps. Listen to PaymentWorks’ own Angela Sarno and Debra Richardson of Debra Richardson LLC as they discuss the benefits of using a truly automated platform and the difference it makes:
Automated Third-Party Risk Management Solutions: More Than an Upgrade
Manual third-party risk management is inefficient and risky. And in today’s environment of tighter budgets, increasing regulation, and rising fraud threats, it’s a risk you can’t afford to take. Automating third-party risk management is a strategic move that delivers measurable ROI, improves compliance, and reduces stress across your organization.
If your team is still spending hours chasing documents, double-checking bank accounts, or manually screening vendors, it’s time to stop and ask: What could we be doing with that time instead? The smartest organizations are already making the shift. They’re investing in platforms that automate vendor onboarding, validate risk in real time, and deliver the transparency leaders now demand.
Get Ready For Vendor Management Appreciation 2025
The Vendor Management Appreciation Day (#VMAD) celebration continues in 2025! And you should join us.
Why? Because there’s no expiration date on honoring one of the most important, under-recognized roles across industries: vendor management.
Join us in observing Vendor Management Appreciation Day (VMAD)! We’re gearing up for the 2025 celebration, and we want you to be a part of it!
VMAD is a new holiday geared toward unifying vendor management professionals and celebrating innovation in the field.
Moreover, we’ve released gifts each month to help you supercharge your vendor management efforts. Additionally, we’re planning some awesome events so everyone can connect and celebrate the important, strategic role of vendor management.
In the meantime, learn more here, and grab some free vendor management goodies.
Want Help Aligning Teams On Automating Third-Party Risk Management?
Explore our blogs below. They’re filled with action items you can implement right away.
Why a Weak Vendor Identification Process at Onboarding Makes You Vulnerable to Fraud
Vendor Verification: How NOT to Do it and What to Do Instead
The New Face of Vendor Fraud Cases
Interested in Regular Tips On Automating Third-Party Risk Management?
Want Personalized Guidance On Automating Third-Party Risk Management?
