Financial Operations Network | Vendor Onboarding
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Vendor Onboarding

It’s the end of October and there are just two months left in the year. In terms of calendar-related responsibilities, your unclaimed property reporting and escheatment should be done. Now you’re looking towards year-end, and right around that corner, 1099 reporting (with its January 31st deadline). That means it’s time to check on the state of your tax information records for vendors. Do you need to get tax ID numbers (TINs) and tax classifications (sole proprietor, partnership, corporation)? Hopefully this is not a worry. You implemented best practices years ago, requiring right up front a W-9, 8233 or W-8 from every large and small vendor your company engages. And you’ve gotten them. True, you got them on paper forms, but you got them, and they’ve been input into the vendor master file long before the first invoice ever showed up. Congratulations. Of course, every now and then there is the odd purchase made without advanced notice to procurement or payables, and it was not made on a p-card. That one. So yeah, this time of year, it’s necessary to do a check to see that you’ve got a TIN and tax classification for everyone so that when you roll out the 1099s, you’re ready. On...

Vendors. You need them. More accurately, you need what they provide, be it product or service. And therefore you interact with them as the providers of the things you need to do what you do. They are anxious to interact with you — to provide services or products — in order to generate revenue. The term “vendor” can encompass everything from major material suppliers to various service providers, to the local bagel shop supplying food for team meetings. How you engage them will vary according to their role. But to transact business involves not only validating them as a going concern but also obtaining information from and about them. That is not just information on how and where to remit payment (which they’ll probably be sure to put on the invoice). It includes agreeing to terms and payment method; ensuring that they are not a sanctioned entity; and it includes understanding their tax status and obtaining their tax ID number (TIN). Bottom line upfront: The time to validate a vendor and gather their tax and payment information is before the vendor has provided a product or service, not after the invoice has been received and is to be paid by accounts payable. Those who’ve re-designed...

New vendor onboarding and vendor record upkeep are insignificant administrative tasks, right? Tell that to the CPO or department head when you hold up a vendor payment because you don’t have a tax ID. Or to your finance VP or CFO when you just found out you paid money to a phony vendor. Tell it to your CEO when the Treasury Department agents in black suits and no sense of humor show up at the office. Administrative? Sure. Insignificant? Hardly. When it comes to vendor onboarding, the devil is in the details. Onboarding is not a “mere” administrative activity. It involves crucial information and critical functions, including vendor validation, payment information capture, sanctions clearance verification and tax classification for reporting and withholding status. Vendor validation, information capture and verification of sanctions clearance are each vital in the process of onboarding a new vendor. If you are charged with responsibility of the vendor file and don’t know what these mean, you need to find out! But here we are going to focus on tax classification. Why is it important and what does it entail? Why It Matters U.S. organizations are required by law to report to federal and state governments certain payments they make. It’s part of...

A Wizard to Help You Help Vendors Help You! Getting a tax ID from new vendors is an important part of vendor onboarding. Best practice is to get it up front. And the best way for the vendor to provide its tax ID and tax classification is to complete and submit it to you on an IRS form with the requisite information, namely IRS form W-9. Or is it the 8233? Or W-8BEN, or the W-8BEN-E? Or maybe the W-8ECI, … EXP, … or IMY? Oh my! It’s not surprising that your new vendor might not know which form to fill out for you. For that matter, do you know which form is the correct one? If the vendor is a U.S. entity subject to payment reporting, you probably know they should submit a W-9. But if the vendor is a non-resident alien, should they complete a W-8BEN or an 8233, for example? (You are clear on the uses of each, right?) And what if they are a foreign vendor? How likely are they to know what form to use? Do you know which form they should use? (Have you ever had to send back the form they provided because it was the wrong...

A new survey conducted jointly by InvoiceInfo and IRSCompliance reveals what companies are doing in their vendor onboarding process and how they’re doing it. The good news is that a majority is doing at least some of the right things. Fewer, however, are doing those things right, or at least in the most efficient and error-reducing ways. The full survey is available, but here are a few results highlighting some key responsibilities of vendor onboarding and methods. In most instances, a vendor must be added to the vendor master file in order to get paid. But consider what that also means: once in the master file, a vendor can be paid! Checks can be written or electronic payments issued to that vendor. Adding a new vendor to the master file is therefore consequential. With this in mind, there is some positive news in the survey. A majority of organizations — 54 percent – require multiple levels of approval for onboarding new vendors. Further, 63 percent of survey respondents validate new vendors prior to purchasing from them. Still, that means more than a third are purchasing before validating, though perhaps not necessarily paying. The news is a bit better on the tax front: 91 percent of...

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. Internal Controls 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...

By Carol Kassem, IRSCompliance, Inc. Onboarding a new vendor is typically a fairly easy process. You request the name and address of the vendor, Social Security Number (SSN) or Employer Identification Number (EIN) and you are done, right? But not so quick! The way in which you request certain information about a vendor may not be compliant with IRS requirements. The most important part to the onboarding process is to correctly classify the vendor. Is this a U.S. person or a foreign person? What information do you need to request? How do you make that determination? IRS requires that you solicit specific documentation from any new vendor to properly confirm the identity of the person or entity to which you are going to make payments. Proper documentation includes IRS Forms W-9, W-8, or 8233. The Form that you solicit will be dependent on the initial information that you have about a vendor — name, U.S. or foreign address, as well as the type of payment that you will be making. Based on this information that you have, you must solicit the Form that is most appropriate for this new vendor. Given that the information that you have solicited will be used to issue Forms 1099...

Errors in vendor information increase both cost and risk. True Story How many times have you received a donation request for a worthy cause or the needy? In most cases the donation seeker is a legitimate organization, but fraud is not uncommon. In one actual instance, many companies received a letter, purporting to be from the Red Cross, requesting a donation due to natural disasters that had left the organization unable to provide support and rescue. In many companies this request was approved by an in-house manager, a general ledger code was provided and a donation check was issued and mailed. As it turned out, hundreds of thousands of dollars from well-intentioned companies went to a doctor who had set up post office boxes all over the country to commit this fraud. It took the FBI a long time to catch up with him because he would close the post office boxes in 30 days and move elsewhere. How did so many companies manage to fall for this fraud? [unordered_list style="circle"] Error number 1: No one questioned the validity of the request from what appeared to be the Red Cross; Error number 2: The address was never verified. [/unordered_list] Checking the U.S. Postal Service address verification database or...

Stop Calls and Emails, Enhance
Service and Increase Profit!

InvoiceInfo saves labor hours and cost by helping suppliers and internal staff easily and instantly get answers online to their invoice-payment questions.

If you are like many finance leaders today, you are being challenged to reduce costs more quickly. InvoiceInfo delivers real bottom-line results almost immediately, allowing you to deploy your customer service staff to focus on more productive, bottom-line oriented tasks.

Let us show you how InvoiceInfo's vendor self-service portal can help your organization eliminate invoice inquiry emails and calls while enhancing service to your accounts payable customers.

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Get Up and Running Quickly and Seamlessly

InvoiceInfo and VendorInfo are standalone applications that can be up and running in as little as two weeks, with little or no IT resources required.

The faster your online portal is up and running, the sooner you will start reaping the benefits. InvoiceInfo and VendorInfo are dedicated solely to helping AP and procurement departments slash the time and expense of servicing vendors, while improving customer service for their suppliers.

InvoiceInfo and VendorInfo are simple solutions with big results. They are easy to implement and easy to use. Here’s how one customer described the process: “You give vendors a URL, provide instructions about what they need to know and tell them to go use it.” It really is that easy.

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Improve Productivity with a Self-Service Solution

For most organizations, deploying a technology solution is a significant investment, and like most investments, the decision point ultimately comes down to the expected return on that investment.

According to a recent benchmark study by The Accounts Payable Network, 60% of AP customer service calls are from vendors while 40% are from internal customers. Vendor issues actually make up even more of the AP call volume than the 60% identified. Many times when a vendor has an issue, the vendor contacts their buyer or purchasing representative, who in turn contacts AP. Even though the call comes from an internal customer, the question originated with the vendor.

Vendor calls affect productivity in your organization exponentially. When vendors call the requisitioner, they are affecting that person’s productivity. Your internal customer’s productivity shrinks when fielding the vendor’s call and again when making the follow up call to AP and getting back to the vendor. Finally, AP’s productivity suffers as a result of the internal customer’s call, the payment status research and the follow-up communication.

With a minimal investment of IT time and talent, you can start reducing customer service calls and expense in a matter of weeks. In addition, you improve vendor relations since you are giving your vendors what they want — answers to their questions immediately — a win-win for everyone involved!

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Easy and Economical Solution to Serve Vendors Around the World

InvoiceInfo can help you provide best-in-class customer service to your vendors around the world at a fraction of the cost.

Many organizations today have offices and operations throughout the world and are dealing with many time zones, different languages, and in some cases multiple ERP systems. InvoiceInfo currently supports different languages and can easily work with multiple ERP systems in different locations.

The key to good customer service is to provide the information that the customer wants when they want it. Whether your customer is a vendor waiting for a payment or a colleague that needs information on payment status, they want their information right away. If your organization has vendors and offices in other countries, they can be challenging and expensive to serve. But, with InvoiceInfo, your international vendors and internal customers can access the information they need when they need it.

With InvoiceInfo, you won’t have to staff your customer service team with 24-hour coverage in multiple languages to provide high-quality customer service around the world.

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Enhance AP’s Role As a Strategic Partner

Learn how InvoiceInfo can help AP do more with less while continuously improving productivity and bottom-line results.

Many automation technologies such as scanning, workflow, e-invoicing, ACH, and electronic invoicing require significant investments of money, time and talent, making it difficult to get buy-in from upper management. Not InvoiceInfo!

If your goal for your AP department is to reduce costs quickly, call or email us today to learn more about how InvoiceInfo can help you achieve this goal through a quick, inexpensive and easy implementation of a vendor self-service portal.

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Enhance Vendor Relationships

InvoiceInfo helps suppliers’ AR departments with simple and convenient access to invoice payment status online at a cost savings for all involved.

It may seem that the organization paying the vendor should hold all the cards in the relationship. But sometimes the opposite is true. Past-due payments and customer service perceptions can harm supplier relationships and disrupt the supply chain.

Your vendors and vendor relationship managers are living in a dynamic, fast-paced environment, so when invoice information is required, it is needed quickly and expected to be of high quality. With InvoiceInfo, your suppliers get answers to invoice inquiries real time, 24/7 with no need to leave messages and wait for responses. Studies show that confidence in data increases when suppliers access invoice and payment information themselves.

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Give Procurement and Buyers the Tool They
Need to Respond to Vendors Quickly

Not only can InvoiceInfo be used by suppliers to learn the status of invoice payments, it can also be used internally within your organization.

In addition to reducing calls from vendors regarding invoice status, you can also reduce internal emails and calls from co-workers wanting to learn the status of invoice payment, and save time and effort and boost efficiency and productivity across the organization. Studies show that 40% of AP customer service calls are from internal customers. Many of these are from requisitioners who have received calls or emails from the supplier checking on payment status. These calls are often more expensive for the company because the internal staff member has taken the call or received an email from the supplier, contacted AP for the payment status and had to return the call or email the supplier.

By providing the vendor with a convenient and credible online option to get the answers it needs regarding payment status, you can eliminate multiple calls/emails between the vendor and the requisitioner saving time and money.

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Eliminate Difficult Vendor Calls and See
Productivity and Staff Morale Soar

Reduce invoice payment inquiries and “promote” your vendor service team to more satisfying and profit-producing tasks.

By sharply reducing inbound calls and emails regarding receipt and payment status that your AP staff must handle individually, your staff can focus their efforts on more productive, cost-saving activities, learn new tasks, feel more confident and boost their careers.

According to a recent American Express survey on customer service, more than one-third of consumers have lost their temper with a customer service professional in the past year. Of those who lost their temper, three in ten “hung up the phone.” Your staff will no longer have to deal with difficult collectors who can be upsetting and disruptive. Your staff will feel that their time and talents are being put to better use and will feel better about themselves, their jobs and their organization. Reducing these calls can be a real productivity and morale booster for your AP department!

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Simplify and Streamline Vendor Onboarding

According to Price Waterhouse Coopers, the average organization spends about $20 in labor to file each paper document, approximately $120 in labor searching for each misfiled document and $220 in re-creation of a document.

Wouldn’t it be great to have all your W-9’s, W-8’s and other registration documents completed online and instantly filed online for easy access when needed? With Vendor Self-Service Onboarding Module, VendorInfo, you can onboard your new vendors in one convenient location and eliminate paperwork and hassles.

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Verify the Accuracy of Vendor Information and Stay in Compliance with IRS and Treasury Department Regulations

Government regulators are increasing the complexity of regulations and penalties associated with vendor-related non-compliance.

Penalties for incorrect 1099’s have more than doubled in recent years. Over the last several years, OFAC has levied more than $1 billion in fines against American companies or subsidiaries that did business with restricted businesses, organizations and individuals on its SDN list. In addition to fining these companies, the Treasury Department posts the names of infringing organizations along with fines paid.

VendorInfo Onboarding Module verifies the accuracy of vendor information and helps protect your organization by avoiding embarrassing penalties and fines.

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