Difference Between Vendor and Contractor

For any business to thrive, many parties are involved. These parties provide a wide range of services for a business, be it funding, the supply of goods and services, the supply of manpower and even consulting services. Examples of these parties include vendors and contractors. They may be structured as corporations, sole proprietors or even partnerships whereby they create cost-effective supply chains. While vendors and contractors may often be confused, they are different in several ways. 

Who are Vendors?

These are people or businesses who sell products to customers or to other businesses. The market in which vendors operate in is quite competitive as customers undertake comparative analysis in terms of price, suitability, guarantee and even performance among different vendors before making a purchase. Most business persons engage more than one vendor to eliminate the risk of the unreliability of vendors. 

Who are Contractors?

These are people assigned specific tasks in an organization that has a set completion date. They are usually short term and contract based, and may need periodic renewal. They include consultants, defense contractors, general contractors, independent contractors, and school bus contractors, just to name a few. 

Similarities between Vendor and Contractor

• Both provide essential services to individuals and businesses.

Differences between a Vendor and a Contractor

1. Definition

A vendor is a person or a business who sells products, usually similar, to different customers. On the other hand, a contractor is a person assigned specific tasks in an organization that has a set completion date.

2. Scope  of  Vendor vs. Contractor

While vendors sell services and products to both large and small businesses, contractors provide services to consumers including institutions and individuals involving projects. 

3. Performance

For vendors, performance is determined by factors such as on-time delivery and quality. On the other hand, the performance of contractors is determined after the end of a task and may include legal consequences such as penalties in case of falling short of the specifications. 

4. Long/ short term

While vendors provide services in the long term, contractors work on a short-term basis and may need a periodic renewal of agreements. 

Vendor vs. Contractor: Comparison Table

Summary of Vendor vs. Contractor

While an individual may choose to work with either a vendor or a contractor, it should be noted that both are an essential component of not only the business sector but also individuals. A vendor basically sells products and services to consumers while a contractor is assigned specific tasks in the line of work. 

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