How to Find the Best Vendors for Your Business

Finding vendors for your company requires some knowledge of global vendor sources and supplier strengths. Vendors’ quality and capabilities will impact your business results positively or negatively. Using the wrong vendors costs you money and can impair your business’s customer satisfaction.

Learn how to get the best vendor fit with this comprehensive guide on strategic and tactical vendor selection and vendor management.

What is a Vendor? 

A vendor is a company or person that sells goods or services to customers that are businesses or consumers. 

Your vendors may be suppliers that produce the goods or wholesale distributors that warehouse and serve as vendors to sell the products. Some eCommerce retail sellers of products may use drop shipment as a strategy that doesn’t require them to store inventory before selling it to customers. Drop shippers will warehouse the items instead as intermediaries between the manufacturer and online retailer. 

Importance of Finding the Right Vendors

When your business finds the right vendors and suppliers, you can gain a competitive advantage, increasing the quality of products and chances of timely deliveries. Your business will also improve its cost structure and gross margin by knowing how to get vendors that excel at cost control, enabling them to offer competitive pricing. 

For manufacturing companies, when suppliers are late in delivering products, production may be delayed or costly expediting may be required. For retailers and eCommerce companies, late deliveries can result in out-of-stock situations causing lost sales. 

Your business should seek high-quality vendors and suppliers that are cost-competitive. Goods and services suppliers will ship products or produce results to enhance your business goals and profitability. 

Most businesses use both U.S.-based and global suppliers to gain access to all of the products and services they need. 

Moving From Vendor Strategy to Tactics

Your big-picture vendor strategy may be to increase the quality and cost structure of purchases from vendors to improve business results and customer satisfaction. Global sourcing of vendors or focusing on buying mostly U.S.-sourced products may be a business strategy. 

Vendor strategy may be derived from engineering, production, and cost improvement strategies or brainstorming session meetings. Such an example is standardizing parts among similar products to increase order volume discounts and reduce the number of parts required to manufacture each product. This type of strategy results in less inventory investment required and a smaller chance of needed rework. 

Or your vendor strategy, like Dell’s, could be just-in-time vendor orders and deliveries immediately before the need to use the raw materials. With recent supply chain disruptions related to the pandemic and other worldwide events, just-in-time may not be the best current vendor strategy. 

Another strategy is vendor retention. Your company can improve its supplier relationships by operating smoothly, communicating status, and timely paying invoices in a way that will please your vendors. 

The specific steps that your business takes and the methods it uses to find the best vendors are tactics. 

Methods for Finding Vendors and Suppliers

9 methods for finding vendors and suppliers are:

1. Online supplier and vendor directories
2. Trade shows
3. Trade organizations 
4. Professional networks
5. Social media
6. Local Chamber of Commerce
7. Online marketplaces
8. Pre-vetted vendors in maverick spend software
9. Vendors with Net 30 accounts for new business credit

Online Supplier and Vendor Directories

Thomasnet® is an online industrial supplier catalog used by businesses to discover suppliers as they source products and get quotes from considered vendors. Thomasnet gives users access to suppliers of 6 million products in more than 70,000 categories. Thomasnet® is an Internet-based solution that was developed for buyers (and engineers for prototype parts) after its initial entry into procurement sources with a multi-volume book-based directory called Thomas Register of American Manufacturers. The Thomasnet® directory includes materials, components, equipment, maintenance, repair, and operations (MRO) supplies sold by manufacturers, wholesale vendors, suppliers, and distributors.

Trade Shows

Your business can find new vendors with booths, events, and speaking engagements at trade shows.  Start conversations immediately with the vendor’s staff at the trade show to begin vetting those suppliers. You may encounter current customers of vendors under consideration at the trade show. Ask any customers for their customer feedback and vendor ratings. Request vendors to provide customer reference business names with contact information. 

Trade Organizations 

Trade organizations in your industry often produce online (and possibly print) magazines with advertisements and directories listing paying suppliers by category. These vendors include product and service providers. As you network with members of your trade association, you can ask other members which vendors they use to purchase a particular type of product or service. It’s essential to quality check and get references for potential vendors included in a trade association’s publications and forums or identified in other ways.

Professional Networks

Your professional networks include LinkedIn connections that are considered business contacts. You can communicate to find vendors other businesses use through LinkedIn. Some LinkedIn ads in your feed may lead you to other qualified vendors. 

Social Media

Online influencers use social media besides LinkedIn and blog articles to recommend purchasers to particular vendors that sell online. This can be accomplished for various products through links to online business websites or eCommerce stores on eCommerce platforms like Shopify. Influencers may be paid upfront as partners by the sponsoring vendor. An influencer could also earn commissions from a vendor as an affiliate for referral purchases from their online store.

Local Chamber of Commerce

Like trade associations for your industry, your city’s Chamber of Commerce produces a vendor and supplier directory. Using the directory and networking with other business members is another method for how to get vendor names. While the recommendations from members can give you clues about the strengths of their vendors, realize that suppliers, vendors, and service companies are paying for directory listings. Therefore, due diligence in vendor selection is required for these possible vendors to consider. 

Online Marketplaces

Online marketplaces give businesses or consumers access to multiple vendors competing for new business opportunities. The online marketplace is the middleman, earning revenue from matches between the vendor or supplier and purchasers. 

Online marketplaces also include eCommerce product offerings from third-party eCommerce businesses in addition to brands sold directly by the retailer on their website. Amazon, Walmart, eBay, Alibaba, and AliExpress (from China) offer these third-party seller offerings to earn a percentage of their revenue.

The third-party vendors may provide order fulfillment through dropshipping businesses as a business model. Dropshipping helps these vendors eliminate the need to carry inventory and perform inventory management.

A third-party Marketplace may include wholesaling with wholesale marketplace members. If you buy products from third-party vendors, consider whether they charge additional shipping costs.

Pre-vetted Vendors in Maverick Spend Software

Your company may use specialty software products for maverick spend (tail spend) for low-dollar, low-volume purchases like individual office supplies. Maverick spending doesn’t require a purchase order from the procurement/purchasing department because it’s not worth the cost of producing and approving a PO for these items. This type of maverick spend software may include thousands of pre-vetted suppliers that employees can choose from. 

Vendors with Net 30 Accounts for New Business Credit

If your company is within three years of startup, it must establish business credit. Some net 30 vendors offer net 30 accounts to newer businesses. The benefit of a net 30 account is that the vendors provide positive credit reporting to help new businesses establish credit with credit bureaus. To find net 30 vendors, check our linked articles and perform a Google search for “net 30 account application” to find more vendors. 

Credit card companies offering business credit cards also give small businesses with a newer business license an opportunity to set up a limited credit line for vendor purchases that uses net 30 terms. Entrepreneurs and business owners may be required to give a personal guarantee to establish credit.

Retain Great Vendors with Seamless Payment Processing

As stated earlier, making seamless vendor payments on a timely basis can help your business retain its vendors. As part of your process, implement a system that lets your company achieve excellent vendor management through the establishment of supplier relationships and communication channels. 

Enabling Timely Payments with Automation Software

Tipalti end-to-end AP Automation and Mass Payments software will streamline your invoice processing, payables, and supplier payments process, enabling timely payments to vendors and access to more early payment discount opportunities. Taking these early payment discounts on invoices when offered by vendors will reduce product costs and improve gross margin and profit margin on the bottom line. 

Eliminating Paper Documents and Manual Processes in Invoice Processing

Tipalti AP automation eliminates paper documents and time-wasting manual data entry, using data digitization using OCR scanning and uploaded or emailed invoices. You won’t encounter the problem of paper invoices lost in the building. Your staff can work remotely or on a hybrid basis. 

Accounting software vendor, QuickBooks, highlights the topic of invoice processing, including the need for automated invoice processing instead of manual invoice processing. Automated Invoice processing covers processes from receiving invoices to capturing the data electronically, digitally matching invoices with purchase orders and receiving reports, online guided approvals, efficient electronic payments, and archiving the vendor invoices in an electronic document repository. 

According to QuickBooks:

 “5 key steps for invoice processing are:

1. Collect
2. Input
3. Verify
4. Pay
5. Archive.”

This QuickBooks payments guide gives you the steps to pay vendors in QuickBooks Online and QuickBooks Desktop. Compare these steps vs. efficient AP automation with Tipalti software integration. Tipalti provides fully-featured and end-to-end advanced solutions for global AP automation and invoice processing, handling the needs of growing companies through scalability. 

Providing a Self-service Supplier Onboarding Portal

Tipalti includes a self-service supplier onboarding portal, letting these vendors accurately input contact information and W-9 or W-8 series forms data (before the first payment), plus their preferred payment method and the information required to make their payments. The supplier portal then shows invoice receipt and payment status, keeping vendors well-informed. You can trigger payment status vendor notification emails.

The Tipalti supplier portal is also a document management repository, giving electronic access to invoices and related documents, like matching purchase orders and receivers to approvers. The guided approval process allows approvals from anywhere, anytime, using the cloud. Fast approvals can result in faster vendor payments. 

Offering a Choice of Global Payment Methods

The best vendors may be from different global sources. Many of the six Tipalti global payment methods are electronic, making vendor payments faster and more secure. For global and cross-border payments, your business can use as many methods as available in the recipient’s country. Tipalti makes payments to 196 countries and 120 currencies. Overseas suppliers and contractors often like receiving payments in their local currency.

Achieving Time and Cost Savings with Fewer Hires

Notice that using a self-service vendor and supplier portal shifts part of your payables and payments work to the vendors, so your business saves staff time. Overall, Tipalti saves 80% of payables time, reduces vendor fraud risk and errors,  and lets you speed the accounting close time by 25% after using its real-time payments reconciliation feature. With the time savings from AP automation, you’ll need fewer hires to control headcount. 

Offering Additional Finance and Procurement Automation Products

Tipalti also offers Procurement software for purchase requisitions and purchase orders and Expenses automation for employee expense reimbursement and control. Tipalti Card, a virtual payment card, helps your business manage maverick spend by each employee issued a card.  You’ll have visibility into vendor and spend categories, plus automatically reconcile the payments.  

Explaining How and Where Tipalti Automation Works Best

Tipalti has ERP integration with all ERP software and also works with accounting software, including QuickBooks, Xero, and Sage Intacct. Tipalti provides scalability for business growth. Mid-size and enterprise companies use Tipalti software without outgrowing it. 

Tipalti finance automation software works in all industries. These use cases include manufacturing and wholesale companies and online marketplaces making global payments. 

Summing It Up

How to find vendors for your business is a daunting task that’s worth the effort to get it right. Once you find these vendors and suppliers, establish excellent vendor relationships to retain your best vendors and critical single-source suppliers. 

Three ways to retain vendors are:

1. Pay timely
2. Offer multiple payment methods
3. Take lucrative early payment discounts to improve your suppliers’ cash flow

By processing invoices on time, your business can take advantage of these early payment discounts offered by vendors and suppliers. AP automation software integrated with your ERP system or accounting software lets you easily accomplish these vendor retention goals and efficiently meet your business needs. To improve supplier payments, read the independent study “A Guide to Global Supplier Payments.”