The timeframe for determining whether to reclassify a vendor from active to inactive status within a software tool is typically 15 months to 2 years of dormancy (no activity).
Reclassifying an active vendor to inactive is different from Offboarding/Termination phase of the Vendor Risk Management Lifecycle. Reclassification based on activity level offers more flexibility in that it is an internal classification. It does not require a second Onboarding/Planning effort in the event internal business partners change their minds by seeking to engage an inactive vendor. This helps for efficiency purposes (presuming there is an active contract in place and initial due diligence documents were collected and reviewed qualitatively). Internal business partners appreciate expediency. Tactically, it may involve merely an internal indication in a vendor profile.
However, if the business strategy changes whereby the LOBs do not want to utilize a particular vendor in the future, then moving that inactive vendor to the Offboarding/Termination phase would be appropriate (rather than leaving the vendor in an inactive state).
Either way, it is important to communicate across the internal organization about the status of vendors for smooth coordination.
I would be interested in hearing what others think!
Sent: 03-10-2023 12:30 PM
From: Anonymous Member
Subject: Status of Vendor (Active to Inactive)
This message was posted by a user wishing to remain anonymous
What timeframe does your FI/Company follow before marking a vendor as inactive?