Today’s topic is one that seems to resonate with all of our customers and with any company that manages more than a handful of vendors. Once your organization starts doing business with 10+ vendors, vendor management could become very manual and more complex.
Some common themes tend to pop up. Here are some of them:
- Untimely invoice submission: Vendors submit their bills in an untimely fashion. Just when you thought you were done with your AP sub-ledger, a vendor sends in a bill for the prior month.
- Spotty communication: Using email for all of your vendors puts the control of that communication in one or two AP clerks’ hands. This can cause issues if there is any turnover.
- Difficulty receiving banking information: Basic bank information requests are normally ignored and not readily provided by all vendors. Sending an email requires banter and more data entry.
- W-9 documents: Obtaining a W-9 for all of your vendors can be a bit of a slog as vendors don’t tend to be very responsive.
- Contact turnover: As employees leave a company, the new reps aren’t managed well.
- 1099 eligibility: Vendors don’t do a very good job of identifying if they are eligible for 1099.
- Lack of transparency: There’s tons of mystery when it comes to billing terms, contact information, and payment status.
Some tools that help with vendor management and submission of bills include a vendor portal meant to manage communication with vendors. Having a self-serve vendor portal brings some real advantages with measurable efficiencies and transparency to all parties involved. Here at Accrualify, our Vendor Portal Module provides some key functionality that our customers take advantage of:
- Analytics: Our Vendor Portal Module provides brief information to allow the vendor to be educated in their transactions. This includes metrics that show average length of payments, top 5 open invoices, POs, and all related payments.
- Vendor communication: Our Vendor Portal Module promotes transparency and better communication between purchasers and vendors. Communicating PO, invoice, and payment statuses helps facilitate transactions faster and identify any potential issues sooner.
- Completeness of transactions: Allowing vendors to have a central repository other than their ERP system ensures that both vendor and purchaser have clean records that reconcile, preventing a lot of future headaches.
- Workflow: Exposing vendors to pending invoices or payments allows them to be proactive in their management and cash flow.
While extending a vendor portal to your vendors doesn’t necessarily mean they will use the system, we have found that by extending visibility into the invoice approval process provides great incentive for them to actually use a portal.
For example, when Accrualify initially began sending invites to vendors in order to login and submit invoices and other information, we were aiming for a 20% response rate. This meant we would have been happy if two out of 10 vendors actually logged into our Vendor Portal Module and used it in some capacity. We were pleasantly surprised to see that we were receiving a 70% response rate from vendors invited. Some of our customers have even reported a roughly 90% response rate from their vendors. So, we did a little bit of homework to understand what our portal is doing that is more inviting to vendors than other vendor portals on the market.
The results of our investigation indicated vendors are looking for tools to help them get insights into their customers’ approval processes. Here are some of the features of our Vendor Portal Module that have been highlighted by our 4,000+ vendors using our system as to why they continue to use our portal:
- Ease of use: Making it easy for a vendor to load their company information, banking details, users, and invoice submission is a key advantage.
- Information: Providing the vendor insight into an invoice going through approval process and a related payment issuance has tremendously increased vendor use of our portal. Disclosing the payment terms themselves has increased vendor responsiveness to correct any issues or plan on payments.
- Central repository of all billing data: Having that ability to show all transactions related to a particular customer from the vendor’s side simplifies the data and allows the vendor to focus on that one customer.
- Quicker payment: Vendors have wised up to submitting their data via these portals, understanding it will shorten invoice processing times.
The benefits of having a vendor management platform include many things, of which are:
- Increased customer/vendor collaboration
- Faster data exchange
- Quicker electronic payments
- Visibility over all transactions
If your organization does not have a vendor portal to obtain all needed vendor documentation and assist in the automation of invoicing, including asking vendors to self-serve, I highly recommend trying an automated vendor portal solution. Your vendors may just ignore your vendor portal invites, however, you will be surprised at the industry adoption of these channels and the increased benefit obtained.
If you are interested in looking into a solid vendor management platform, I would be happy to recommend Accrualify’s solution! Feel free to reach out to schedule a demo.