Vendor alignment is one of the most important parts of a business, simplifying a huge part of business management. It increases the efficiency of your work by onboarding them onto a certain software and increases the profitability greatly.
The following article highlights various features of vendor alignment. By the time you reach the end of the article, you will be quite well informed on what vendor alignment is, the benefits of vendor alignment, and the mistakes you should avoid during vendor onboarding. Read on ahead to find out.
What is vendor alignment?
The first question that might come to mind is, what is vendor alignment? Put simply; it is a systematic process that helps a business to easily collect data and documents, to qualify, approve and make contracts with vendors. This also helps in making the process of buying goods from existing vendors much easier, making this process a must-follow in many businesses.
This process is similar to other processes that happen in businesses, like employee onboarding. It is a process where new employees are taught the way of the company, where you tell them the practices followed by the company, what they are expected to do, and what rules they should be following in regards to being a good employee. Vendor onboarding is such a process that lets the vendor into your business and accommodates them into it to make the best of what you can.
Vendors are quite important to your business, as they are the ones providing you with the products you require to process or resell. So, making sure that you are keeping your vendor up-to-date and including them in your business is very important. Vendor alignment (or vendor onboarding) is a process through which you can implement the vendor very efficiently into your business.
Benefits of Vendor alignment
There are various benefits to vendor alignment. These include: It provides greater competitiveness to your business, which means that it lets your business flourish in the market. There have been statistics that show that about 40 percent of the money earned in sales is spent on buying raw materials from vendors. Vendor onboarding lets you incorporate the vendor into your business and lets you make the process of buying products a lot easier. Implemented vendors also provide some discounts and lessen the load of the bought products.
It increases the efficiency and the profitability of the business. When you keep the vendor up-to-date and streamline the entire process, you can cut down on the losses caused by tracking losses, productivity losses, and redundancies. You can reduce the redundancy by automating the vendor onboarding by reducing the paper trail of your invoices.
It mitigates the risk caused due to redundancies and productivity losses. It lets you educate your vendors regarding the processes followed in your business and comply with the government policies. It lets you validate your vendors by modifying your internal policies in compliance with the same. It helps you form stronger relationships with your vendors. Once you bond with your vendors, there is a good chance that you can cut down on the cost of buying the products from the same vendor.
Mistakes to avoid
There are various mistakes you might make while onboarding a vendor. Here are a few mistakes you can make and how you can avoid them:There might be a lack of planning in the vendor onboarding. The best way to avoid this is to not keep a lazy attitude regarding vendor onboarding and plan ahead of time. To plan, you need to know how to use the software that lets you onboard the vendor and to keep the facilities to accommodate the vendor ready. Once you onboard a vendor, there can be a lack of training for the vendor. You need to make sure that the rules that your business follows are crystal clear for the vendor and there is no miscommunication. This training needs to be given both internally and externally to the vendors and the employees who need to accommodate the vendor.
There can be a failure in communication with the vendor. Keeping the vendors up-to-date is a very important factor in making the vendor onboarding process successful. The key to success here is to not make any form of miscommunication with the vendor.
You should be able to be flexible for the vendor. You should be able to modify some rules of the company in such a way that your business doesn’t get hurt, but you can accommodate your vendor properly.
Conclusion
In conclusion, vendor onboarding is an important process that makes your business more efficient and helps you make the entire process more profitable. Onboarding lets you accommodate your vendor into your business and cuts down on the major costs of buying products. Hopefully, this article has enlightened you regarding vendor onboarding, its benefits, and the mistakes you should not make.
Vendors are an important part of any business, and it is important to give them the freedom they deserve. But giving vendors freedom doesn’t mean you allow them to be late to deliver products. Tardy vendors can be a cause of concern for your business; without punctuality, you can face huge losses.
The following article highlights how you can deal with vendor tardiness most efficiently and subtly possible. While you should forgive them for being late once or twice due to an emergency, frequent lateness is a cause of concern.
Work on any communication-gapsTardiness can be a product of miscommunication.
To prevent this from happening, the best way would be to communicate properly (Surprise!) in a respectful manner so that it seems formal but not too imposing. Delays are fine, but there should not be any uninformed delays from the supplier’s end. Other forms of miscommunication include the bad attitude of the supplier or the disorganized behavior of the supplier. You cannot rectify these behavioral traits right away, but you can try to communicate so that this does not cause too many issues.
These issues should be properly addressed in meetings with your vendors. You can be amiable with your suppliers while they are performing properly, but you need to be stern with them if they don’t behave properly. Keep communications open, be polite, and do not step back even if the suppliers are not responding the way you want them to. This way, you can work out a lot of issues you might face with supplier tardiness.
Get promises in writing
Getting things in writing is very important; it means that you have proof that the supplier agreed to the said date on paper. This clears almost all problems that may occur due to miscommunication. It also acts as a reminder for the supplier in the worst-case scenario that he forgets your order. Sometimes, word-of-mouth can be unreliable; people can forget or make mistakes in the order, like bringing 50 pieces of a certain product rather than 60 pieces, or being a week late because they got the wrong message.
It is possible that due to some restraints, some suppliers may not agree to sign a written contract. It is up to you to tell them that these reasons include management and administrative decisions, which cannot be bypassed, making it mandatory to bring the materials on the said date. Such measures need to be taken only if the supplier fails to deliver properly frequently. If the supplier still has issues in delivering on time, there are other ways to deal with them.
Escalate smoothly
You can forgive tardiness once or twice, as mentioned earlier if the supplier is facing any form of an emergency or has relayed the information regarding the delay prior. It is up to you that you don’t let this tardy behavior become the norm and not take your business lightly. There can be various ways in which you can handle a tardy vendor; these range from a verbal warning, a letter sent to them regarding the situation, and keeping meetings with them regarding their poor performance. You need to ensure that the vendor gets your point and takes the necessary steps to correct their behavior.
In case they repeat the same mistakes after multiple warnings, you can escalate your actions. You can take disciplinary action against them if necessary or suspend their services for a while. These actions must be taken in time; if you are too lenient with them, it might cost you a fortune and lead your company to face severe losses.
Evaluate and replace
There can be times when you chose a supplier because you felt they were the right choice for the business at that time. While that may be the case, as your business evolves, the supplier, too, needs to evolve with you. If they are unable to do so, you need to evaluate your choice of supplier. This is not just a way to deal with tardiness, these decisions are to be taken in extreme situations, but these cases tag along with the makings of a successful venture.
Replacing a vendor is a decision that should be taken only if they fail you time and time again. There are many factors you need to take into consideration before you replace a vendor, like what do you expect from the new supplier, what quality of products do you need and do they fit well with your business.
Conclusion
In conclusion, the best way to deal with a tardy vendor is to communicate with them and, if they don’t respond in kind, take the necessary action against them. This article highlighted the major ways in which you can deal with such a situation; hopefully, you found your answer through it.
The accounts payable department in a business refers to the work where you pay your suppliers and, in turn, receive the products to put up in your store. Any pending payments, any discounts to be availed, and all the paperwork associated with your accounts belong to the AP department.
While the supply chain involves a lot more than the scope of this article, any disruption in the supply of products or the selling of these products will lead to a disruption in the accounts department of your business. This article will highlight how the ongoing supply chain crisis affects your AP department.
Delay in payment
With the advent of the pandemic, every industry has seen a huge shift in the supply and demand of products. The clearest of them all is in the sanitation industry. While people used to buy sanitary products like masks and sanitizers before the pandemic too, after the virus took effect the demand increased explosively, causing there to be excess demand and inadequate supply. Due to this break in the supply chain in various such sectors, many big companies have started delaying their payment to their suppliers.
These delays in payments are nowadays extended to over 90-120 days, which is a very long time to go without any payment. Such actions affect the trust between you and the supplier and also adversely affect your AP department. Backlogs in such payments can increase the workload and the paper load in the accounts department.
Additional Financial Costs
When there is a shortage of a certain product, like we have seen a lot during the first wave of the infamous CoVID-19 pandemic, it is often followed by inflation. This isn’t just at the retailer to the consumer level but also at the distributor to supplier level. This means that if you want quick and immediate services, you often will have to pay a lot extra. These financial costs are not just damaging your business, but your accounts department too.
If you have automated your AP workflow, there are certain values you might have entered for the cost of certain products. You’ll have to overwrite all the costs that you have fed in, which is a huge hassle. It is even harder if you are doing the work manually, you’ll have to account for every last penny that is being spent in the company.
Subpar product quality
As demand increases, production will also increase. However, keep in mind that all the processes are facing an increasing shortage of raw material or the supply of the same. Due to this, the product quality is affected gravely. Any form of marketing or branding falls short of making the product successful if you don’t have the quality to back it up. The products that are being made after the pandemic have defects, which disappoint the retailers, which ultimately adds up to the supply chain.
Any form of defect in the product means that it will be returned or scrapped, both of which incur losses in the ledger of the company. This ledger is then overlooked by the accounts payable department, which has to look at all the payments that have to be made to the vendors and suppliers. This is also a matter of goodwill between you and the vendor.
Difficulty in accessing capital
Many small businesses find it difficult to access their capital in the middle of such a supply chain crisis. They find it difficult to pay basic bills like electricity or water bills and to top it all off there is a shortage of products. This causes the capital to diminish at a faster pace causing the business to see many ups and downs. This supply chain crisis has been affecting everyone adversely, especially the businesses that had been steadily growing before the lockdown.
The accounts payable departments of these businesses have been growing too, considering that they haven’t been dealing with big amounts of money. This means that due to the excessive workload these businesses are facing, they have been suppressed and haven’t been growing well. Capital has been a problem for many startups, due to which many people have been facing a great deal of stress.
Endangering goodwill
The goodwill between the business and the supplier is a very pristine relationship that should not be broken in any situation. However, this supply chain crisis puts this goodwill between a rock and a hard place. Suppliers find it hard to supply the product to the retailers on time, while the business people find it hard to pay off the money on time. Due to this, the accounts payable department also faces many mishaps; the entire money is put on hold, the paperwork increases, and the workload gets stressful. This also adversely affects the AP workflow.[/vc_column_text][/vc_column][/vc_row]
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Accounts payable workflow is one of the most important parts of a business, and vendor vetting helps the business to divert risks if the supply chain goes awry. How are they linked? How does automating the AP workflow help in vendor vetting? Many such questions will be answered in this article.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image=”2808″ img_size=”full”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]There are many aspects of a business you just can’t ignore while running one. Vendor vetting is one such aspect where you cannot compromise. Read on ahead to find out what it is and how you can do it in your business.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
What is Vendor Vetting?
Vendor vetting put simply, is a risk management procedure that businesses often do to avoid threats from any supply chain crisis that may occur. People select vendors to become their partners, but the vendors should be compliant with the standards and regulations of the company. The vendor’s requirement might vary from company to company, which means, even if two companies are selling the same product, they might have different regulations for the vendors, depending on their geographic location and other factors.
Vendor risk management is an important precursor to vetting. Evaluating your potential vendors and the risk associated with them can reduce any disruption associated with the process.
Here are the steps to make the selection of these vendors easier. Proper vendor selection criteria have to be set up, search sources for suppliers, establish a few ground rules for the suppliers to come, and finally, compare the final list to recruit a vendor. Vetting proper vendors can make a business much more efficient.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”2/3″][vc_column_text]
What to consider while vetting a vendor?
Various factors need to be considered before you delve into vendor vetting. You need to understand the impact of this decision on your business; they are ultimately the decisions you need to make or the needs you have to fulfill via this supplier. Here are the impacts a vendor will have on your company:
They provide some functionalities to the business; they generate the needs and requirements. This is directly related to the AP workflow as it is a workaround for any form of supply chain disruption; it is a safety net to fall on.
They expand your business network a lot. It increases the collaboration of all suppliers and makes payments easier. This, in turn, also reduces business costs, which is a big plus point.
They can easily be integrated with ERP systems and the AP workflow of your business. They help validate your budget and help in maintaining a business document workflow.
They help expand the business in the global deployment of the workforce and business. They help in multi-currency transactions, which is an important part of your workflow if you are working in multiple countries or multiple languages.
They help in building an ecosystem approach, which means that you can have multiple vendors for multiple products. This way, one person doesn’t have all the load, and you can get a much more efficient job done.
Accounts payable are the part of a business that helps you pay the vendor you have vetted, so automation has a big part to play in this process. But before that, you need to understand what automating your accounts payable workflow entails. Automating means that every process that is done manually will be done by a computer. While some companies manage a semi-manual AP workflow, completely automating it would mean each process is done by software or some artificial intelligence. To achieve this, you need to reform your entire workflow to accommodate digital data entry and digital payments to make sure everyone can operate the technology.
How are they linked?
Accounts payable and vendor vetting are deeply linked. Automation makes vetting easier; you also need to know what kind of vendors know how to use digital payments and accept online receipts. Automation includes any form of additional costs that may occur in the process, taking into account every little detail.
This entire situation leads to a lot of benefits for both parties. The supplier gains a trustworthy partner, while you gain a lot of discounts and a good network. This way, you are bound to get good products even if you expand, as you have established a sense of goodwill with your supplier, which will always carry on as the trust between you.
Conclusion
AP workflows and vendor vetting are two very important processes for a business. While they are not mutually independent, you cannot slack off on either, as they can greatly affect your business to make it or break it. Vendor vetting is necessary for a business to make sure that their work is done efficiently and they have secured a vendor for their needs in a specific sector.[/vc_column_text][/vc_column][/vc_row]
Automating this process can be a hassle, but there are various ways in which you can ease into this transformation. This way, you can make sure that no employee feels left out or anxious.
This article holds the key to easing into the transformation of automating the AP workflow. Go through this article to make sure that there are no hitches in the AP workflow transformation.
Paperless Automation
Optimizing the entire AP workflow is a very obvious solution to make the entire process efficient and easy to use. But it comes with its drawbacks; many people who aren’t used to the digitized system can mess up and cause losses. To ease them into a system with paperless automation, the first step you can take is to give the employees trials before converting entire systems to a digital version.
You can conduct workshops and reinforce and reward behavior that enhances the team’s morale and the mentality to use such a system. This process saves a lot of money, it makes it so that you spend next to no money on the invoices, and the entire process, from data entry to the final payment, can be done cost-effectively and efficiently. Paperless automation is one way to make easy transitions, but you need to be prepared before any such change. Otherwise, you might end up making your employees anxious.
Streamline your workflow
Even for an automated workflow, errors while data is entered or the signing while cheques are being made can be harmful to the company as a whole. The more complex the systems, the more the chances of errors to occur. There can also be various hindrances in the approval process and tasks that have to be mandatorily manual. To reduce the chances of errors occurring, you need to streamline the entire process and standardize the quality of this work.
This form of centralized work works well for the company too, as it is believed to be quite organized. In the case that the company has multiple branches and you are the head of the AP team, all the company’s invoices will come to you for approval. Data redundancy can occur in such a situation which should be avoided wherever possible. But the fact that all the data needs to be centralized before moving forward stands; it is necessary for a streamlined workflow.
Firm up access controls
Access controls should be limited to a few people; that way, there won’t be too much of a chance of error. It also minimizes the duplication of data in case someone copies the data and reduces the chances of fraud. By limiting access controls, you might be cutting down on a small amount of transparency, but it increases the quality of the work by a huge margin. It is also one way to ensure that no one messes up the entire system by entering the wrong data unknowingly.
Giving the AP controls to specific people works well with the idea that the access controls have been secured and there is little to no chance of the breach of sensitive data. These invoices are often worth millions, and a small change here or there can cause the entire economy of the company to come crashing down. So tighten your hold on the access controls.
Standardize payment
Just like the workflow was standardized, if you standardize the method and delay before the payment, you should be able to build a good amount of goodwill with your suppliers. They will know what to look for to get the payment and when to expect it. This sets a flow that can’t be disrupted until there is an emergency of sorts in the company itself. This payment can be standardized to being online payments (It’s the easiest way to make payments, the most cost-effective too), cheques, or simply cash (This is rare in big businesses).
However, this standard way of payment shouldn’t include negotiations or renegotiations. If you can lower the costs or get more supplies for the same costs, go for it. Avail discounts whenever you can, wherever you can. Being efficient in the costing of your supplies is as important as being efficient with your AP workflow.
Keep information up-to-date
All the information, particularly the supplier information, should be up-to-date. This means that if any information is out of date, it can cause major issues in the company, along with huge losses. To avoid this, try to remain updated on the various contacts of these suppliers.
Conclusion
In conclusion, keeping the entire process efficient and streamlined is very necessary to the health of the company. Keeping this in mind, take care of the AP workflow, which in turn takes good care of your company.
