05 Oct Vendor Onboarding and P2P Vendor Relations: The Value of Getting It Right the First Time
Like many other business processes, vendor onboarding is subject to an organization’s internal controls, compliance with regulations imposed by various government agencies, demands for productivity and expectations of minimum levels of customer service.
Well thought-out and effectively managed vendor onboarding programs deliver high quality in each of these areas.
Vendor onboarding is key to every successful vendor management program. But it can be complex, tedious, and labor intensive, with medium- and large-size companies managing thousands of vendors and the very largest managing tens and even hundreds of thousands.
Onboarding includes processes for obtaining correct, complete and verified vendor information and for entering that information into systems for accounting and purchasing. The onboarding processes can be both manual and automated.
Subject to the organization’s internal controls, accounts payable is the last control point before cash leaves the company. Depending on your industry, 30%-70% of all the cash that comes into a company goes back out through accounts payable. Appropriate and effective controls for onboarding include segregation of duties to help protect against vendor fraud, payment fraud and employee fraud.
Internal control policies for onboarding also help insure vendor, invoice and pricing legitimacy as well as payment accuracy and contract compliance. Payment accuracy protects against paying overcharges and duplicates. Controls also help to identify and manage vendor credits.
Vendor onboarding compliance includes IRS and state Information reporting which covers W-9’s and 1099’s, W-8’s and 1042-S, FATCA and verification against various lists of companies considered undesirable to do business with, such as OFAC/SDN.
Onboarding can be a paper-intensive process. In addition, sometimes the onboarding information provided is incomplete and incorrect. Paper and multiple contacts with providers of information to obtain or correct information increase touches and create opportunities for errors to happen. Automated onboarding processes can eliminate touches and increase productivity.
Accounts payable touches everyone — vendors, employees, management and most levels of government. Onboarding is the first stone in the foundation of the relationship with each of these stakeholders. If onboarding is done efficiently, effectively and completely, it will result in not only stronger, more productive relationships, but in lower vendor management cost as well.
To see how VendorInfo onboarding solutions can benefit your operations and your company click here to request more information or call (678) 335-5735.