Managing vendor relationships can be a challenge, especially as organizations make more and more demands on their vendors, such as improved pricing, terms and shipment quality. On the back office side vendors are being asked to invoice using e-invoicing or EDI, to accept payment via ACH, EFT or credit card and to register and work with with third-parties in order to get paid.
What can accounts payable do to help improve relationships with their vendors?
- Pay invoices accurately and on time per the agreed upon terms of the contract or purchase order.
- In real estate you often hear that the most important thing is location, location, location. In customer service, the key is communication, communication, communication. It is important for AP to communicate with vendors from the very beginning of the relationship and to set expectations upfront. One way to do this is by sending a welcome packet communicating what is required from the vendor to ensure that they get paid accurately and on time. Some items that could be included: Welcome letter and informational packet; vendor registration form; proper channels for resolving problems; who and where to send invoices and what information needs to be on the invoice; policies regarding discounts and partial payments; W-9 or W-8 and a link and instructions for using a vendor portal if appropriate.
- Make friends with procurement. Remember that AP and purchasing both have the same goal — to take care of their customers/vendors.
- Ask your vendors what they need to do business with you and provide it to them whenever possible.
- Set up a FAQs to be posted to the organization’s website or vendor portal so that vendors can get answers to basic questions.
- Reach out to your vendors to get a better understanding of the problems that arise and can be fixed.
- Create training scripts that staffers can follow when responding to common vendor questions such as “Why haven’t you paid this invoice?” or “Why was this short-paid?”
- Document notes and get vendors first/last names each time you talk to them so you can use them as you speak on the telephone.
- Never point fingers when errors are made on their part — focus on the resolution first, and then — if you must, as with recurring issues — work respectfully to fix the cause of the issue.
- Create a form that contains the reasons why a payment does not match the invoice amount and include it with every payment that is different than expected. If there is a problem with an invoice, let your vendor know upfront — don’t just short pay the invoice with no explanation.
- Keep the lines of communication open. Maintain a good rapport with the vendor so that when special circumstances arise you are in a better position to negotiate. Ensure you communicate with vendors regarding other invoicing issues such as incorrect terms, pricing, shortages and duplicate charges.
- Ensure that you and your vendors agree as to when the “clock” starts when taking discounts.
- Review statements regularly to stay on top of potential problems with missed or misapplied payments. Keeping accounts clean and up to date will ensure that vendors are paid promptly and advised if you haven’t gotten the invoice.
Vendor inquiry/customer service automation can be your ally. Vendor self-service portals allow your vendors and internal customers to access invoice status via the web. Vendor portals cut down on frontline calls and make it easier to resolve issues when vendors do call because vendors can do research before they call. Supplier self-service portals help solve many vendor issues, leaving AP staff to address the more difficult problems. No longer dealing with 80% of the inquiries that ask if payment has been made, the AP team can focus on the 20% of inquiries that are real problems. Or, best yet, deal with other more value-added tasks such as spend analysis.