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Performing due diligence is a crucial process for any organization partnering with a third-party entity. However, manual approaches often prove inadequate for regularly screening large volumes of partners, vendors, funding partners, and customers.
Choosing the right due diligence tool can help make the process more accurate and efficient. But with many options on the market, how do you select a solution that's worth the investment?
In this buyer's guide, we'll walk you through what to look for in due diligence software, including six questions to ask your prospective purchase. Read straight through to learn more about how these tools work, or skip to what you need:
Due diligence software (or a due diligence tool) is a digital solution designed to streamline and enhance the process of evaluating potential investments, partnerships, acquisitions, or clients. Instead of relying solely on manual research, these platforms combine data aggregation, advanced analytics, and automated workflows to give organizations a clearer, faster, and more reliable view of risk. Whether you are conducting financial checks, verifying compliance, or assessing reputational exposure, due diligence software helps centralize information and reduce human error.
Using a dedicated due diligence tool offers several advantages over traditional, manual research methods:
Efficiency and speed: Automated data collection and analysis significantly reduce the time spent on background checks and risk assessments.
Comprehensive data access: Many due diligence tools integrate with trusted databases and sources, ensuring broader coverage and deeper insights.
Consistency and accuracy: Standardized workflows minimize the risk of oversight or inconsistency, helping organizations meet compliance requirements.
Scalability: As your organization grows, due diligence software scales to handle higher volumes of transactions, clients, or partnerships without adding resource strain.
Improved risk management: By identifying red flags earlier, companies can make more informed decisions and avoid costly mistakes.
Purchasing the right due due diligence tool can have a tangible positive impact on your organization—but purchasing the wrong tool would lead to sinking money in a bad investment and potentially allowing problematic relationships slip through the cracks.
Below, we provide six questions to ask yourself as you consider the best due diligence software to purchase for your organization. Each question highlights primary features your tool should always have:
Your due diligence efforts will only be as good as the data you’re using. But in this ever-shifting data landscape, it can be hard to identify quality data to get the maximum benefit from your qualitative and quantitative risk analysis.
Furthermore, because the regulatory landscape changes quickly, you need data sources that are up to date with reliable information. Conducting research with limited data sources and search engines that too heavily rely on historical data can therefore mean that you’re making decisions on outdated information.
To account for this, you need a technical solution that spans reputable premium sources aggregated specifically for due diligence.
MORE: Nexis Diligence+: Unrivalled content for unrivalled confidence
Even if you have done your initial due diligence screening, the threats of risks don’t stop there. You still need to conduct ongoing monitoring of the relationship to provide visibility into emerging red flags that could put your organization at risk.
As regulation changes, it's important to ensure your partners maintain compliance with new legislation. Additionally, new leadership or negative news could compromise what an existing partnership, and ongoing monitoring will allow you to decide if and when it's time to cut ties.
The due diligence solutions best solutions automatically screen entities against watchlists, politically exposed persons (PEP) data, sanctions and more.
For example, Nexis Diligence+ screens key entities against over 500 lists including OFAC, regional sanctions and enforcement lists, in addition to other news and legal sources. This allows you to identify potential issues early through continuous monitoring versus periodic manual checks, giving you the ability to get ahead of any problems. Additionally, you can set up custom alerts to notify you when new relevant content is detected to stay on top of emerging risks.
Finally, the automated report builder within Nexis Diligence+ helps you create customized, auditable reports quickly and share them with key stakeholders so your entire organization can be informed of any potential risks.
MORE: Due Diligence Checklist
As your needs expand, the platform should efficiently scale up to handle high user and entity volumes. If you are stuck checking one entity at a time, you won’t be able to complete your due diligence reports as quickly as you need them. Bottlenecks like this waste time and put you behind on critical screening. This is why it’s important to prioritize scalable, enterprise-level solutions that integrate with your risk management workflows.
Discover what Nexis Diligence+ can do for your risk management.
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A due diligence tool that is complicated to use with a lot of upfront challenges almost defeats the purpose of having the technology in the first place. When integrating a due diligence tool into your workflow, prioritize a tool with an intuitive interface, which minimizes training time so new users can quickly begin conducting searches.
Less complexity means your team can focus on the due diligence itself rather than learning the tool, saving you time in the long run. Look for simplified navigation, guided workflows, and built-in assistance.
Conducting due diligence research is only half of the battle. You’ll then need to assemble an auditable report that collects and summarizes key findings to share with leadership and stakeholders. While you could create this report on your own—which would take extra time, resources, and money—an automated report builder helps you streamline the process and focus on what’s important while providing transparency into the process and rationale behind decisions.
The right technology not only enhances diligence capabilities, but it also boosts speed and efficiency. Prioritize tools providing suggested search terms, automation, and shortcuts to help compress process timelines.
Conducting due diligence is your insurance policy. Sure, you can get by with an open web search or other database search, but if your information isn’t complete or it’s in accurate, you run the risk of facing major financial and legal consequences.
If you keep the above questions in mind when considering a due diligence tool, you're more likely to find a platform that's easy to use and automates tedious tasks. In the short-run, it will save you money as it enhances your organization's productivity and external relationships. In the long-term, it will prevent large financial consequences that can result from a lack of a due diligence process.
LexisNexis is here to help organizations across industries conduct smarter, more accurate due diligence with a suite of due diligence software options:
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