New supplier onboarding or vendor onboarding can sometimes be a slow-starter. Capturing payment information and tax details while getting new vendors up to speed on your systems, policies, and procedures can cause delays in payment processing, holding up your day-to-day business operations in ways you would likely prefer to avoid.
This article defines what supplier onboarding means and describes how to improve your supplier onboarding process.
What is supplier onboarding?
Supplier onboarding is the process of collecting information (including tax forms) from a new supplier to set them up as an approved vendor for your company. The purpose of supplier onboarding is to validate the legitimacy and processes of the new supplier so your company can effectively do business together.
What is the true cost of vendor onboarding?
Having a dedicated person on staff to walk new vendors and suppliers through your onboarding process is certainly one solution, but in today’s fast-paced business climate, do you have the time or the resources to allocate to this task?
When onboarding a new supplier, the flurry of emails and the ensuing questions are something that many companies see as an unavoidable cost of doing business. In an enterprise scenario, delays such as these can end up costing thousands of dollars. Small businesses stand to lose as well, as the cash flow they depend on can be stuck in limbo while systems are put into place, and the inevitable kinks get worked out.
Strategic vendor management is the key to ongoing success
In many industries, strategic supplier information management is the foundation that supports growth and innovation. However, effective communication in the enterprise is often impeded by data silos caused by multiple teams in as many locations, some of whom may not be using the same systems to collect and leverage data.
How do businesses automate supplier onboarding?
Self-service supplier portals may be part of a customer’s add-on AP automation software to streamline workflows and manage and pay vendors in its supply chain. The best real-time supplier portals provide self-service supplier onboarding, followed by supplier relationship status and monitoring, including order delivery and payment status and reminders for renewals or updates required.
A self-serve supplier/vendor portal is a viable solution that provides value for all stakeholders. It offers your vendors and your in-house accounting team a simple, easy-to-use web-based interface that they can access at any time, from anywhere.
A supplier/vendor portal that offers dynamic web forms that connect to your AP/AR software is even more valuable. It eliminates several steps in the on-boarding process, creating a seamless experience for your vendors and providing your finance team with a more streamlined way to acquire the information they need.
Vendor onboarding portals are designed to let you collect the information and onboarding documents you’ll need from vendors.
Vendor master data needs only to be entered once, and your system will be automatically updated with the new information. This helps you save time and money, as your staff can refocus their efforts to higher-value tasks.
How to develop an effective supplier onboarding process
Analyze and flowchart supplier onboarding workflows in your business. Consider developing a vendor onboarding checklist or questionnaire to be sure that all related business processes are covered. You may decide to establish more extensive processes for strategic suppliers with sigificant potential impacts on your business if certain adverse events occur.
Processes to include in supplier onboarding and supplier management are:
- Getting vendor contact information
- Remittance information
- Other supplier information
- W-9 or W-8 tax forms
- Validation of vendor data for fraud prevention
- Due diligence
- Risk assessment of prospective suppliers
- Approval process
- Purchase order
- Payment terms
- Order delivery
- Vendor invoicing
- Payment status
- Vendor management metrics.
In a typical vendor onboarding process, multiple departments need to be involved, each with their own data requirements to support their day-to-day activities. To be effective, you need a solution to facilitate collaboration and enable a timely response when needed. From international tax issues to legal agreements, purchasing, supply chain, logistics, fulfillment, accounting, and more, documents and data must be accessible to the appropriate people when they need it most.
Having a supplier portal available simplifies these activities, giving stakeholders on both sides of the business relationship a centralized, barrier-free solution that reduces risk and provides value from end-to-end.
The most apparent advantage of a vendor portal is that the vendor master data is centralized, along with invoicing, order, and payment history. This eliminates potential data silos, lifting barriers and enabling teamwork across a global landscape.
The supplier portal can be used beyond onboarding for supplier management throughout the supplier relationship lifecycle. The automated portal can be used for updates and ongoing risk assessment monitoring as part of your company’s risk management program.
As it relates to your accounts-payable and accounts-receivable software and processes, this translates to a more streamlined workflow that is both labor-sparing and dynamic. It provides financial metrics in real-time, offering dependable business intelligence and affording your decision-makers the ability to move forward with confidence. Being able to take advantage of opportunities when they arise is the key to growth. The faster and more efficiently you can get your new vendors on board, the more such opportunities will become available.
Benefits of supplier onboarding with a self-serve portal
Advantages of a self-serve supplier/vendor portal include:
- More accurate data entry and data management
- Get paid faster: invoices are available and can be managed in real-time
- No redundancies or duplicates
- 66 percent reduction in payment errors
- More timely payments
- Collect vendor master data once, update when needed
- Suppliers can access their secure self-serve portal anytime, anywhere
- Transparency in payment and order processing
- Global payment solutions with support for 49 countries
- 11 different languages supported
- Current tax and VAT solutions reduce reporting errors at tax time
- Support for SWIFT and IBAN bank routing
- Built-in fraud protection
- Optimize your payment systems
- Boost your team’s productivity
- Automate repetitive tasks
- Customize with your brand’s imaging and identity
- Web-based or API
- Easy and intuitive self-service option promotes fast adoption
Takeaway – Supplier onboarding
Supplier onboarding is a process for implementing new supplier relationships, getting supplier data, communications, centralized documents, and status in combination with integrated vendor master and ERP software databases. Using online software platforms like self-service supplier portals and AP automation software makes vendor onboarding and two-way supply chain management more efficient.