Managing supplier information requires diligence to effectively perform accounts payable and supplier payment operations. Particularly in a global marketplace, the need to streamline interactions with suppliers while maintaining correct contact, payment, and tax data, are critical to enabling growth and reducing the costs of doing business.
Supplier management software can simplify the processes around supplier onboarding, payment management, and supplier communications. Many organizations opt to handle supplier management processes through custom developed supplier portals that connect to an IT infrastructure in a back office process. However, the use of third-party supplier management portals is becoming more prevalent as companies look to reduce their custom development work on non-essential, highly-volatile projects such as accounts payable.
Supplier Information Portal Best Practices
To maximize adoption of a supplier portal by partners, vendors, and suppliers, it’s critical that the supplier portal meet these key criteria:
- Be available 24×7 – In a global economy, access to self-service features should readily available.
- Reduce data entry requirements – Portals should intelligently guide users to provide the required information and allow upload of the native supplier invoice, rather than form-based entry.
- Offer convenience to payment status – Portals should be able to provide suppliers real-time information on the status of their invoices and payments. Think of it as a reward for maintaining their own information.
- Offer payment method selection – The portal should offer the flexibility for choosing a payment method (e.g. paper check, ACH, wire transfer) including international payment methods (e.g. wire transfer, local bank transfers, etc.) in local currency.
- Be updated to changing conditions – Whether it’s banking changes or tax regulations, the portal should be easily updated to comply with the changing dynamic of the global economy.
- Localizable – Portals should support languages other than English (when suppliers are overseas).
- Consider branding – Suppliers are more likely to work with your supplier portal if it features your brand so they have confidence that your business is managing it.
Automating the Supplier Management Process
While the supplier portal is a critical component to the supplier management process, there are important considerations for the internal operations as well.
- Invoice processing – Invoices should be easily accepted and automatically entered into the system. Approval workflows should secure and digital for a complete audit trail.
- Integration with payment engine – Payments should be schedulable and take into account the payment method chosen by the supplier.
- Email notifications – Automated emails should be sent when payment status changes or if there are invoice or payment issues.
- Supplier data verification – Supplier data should be screened against internal blacklists, OFAC SDN (AML) databases, etc. to reduce the risk of illegal payments. Supplier tax data (EIN or SSN) and forms (e.g. W-9, W-8 Series) should be validated.
A Note about Supplier Networks
One way organizations may try to achieve supplier management is to utilize supplier networks. The downside to supplier networks is that they require the supplier be registered, often for a fee, to the network and conduct their business and data entry through the network. This includes either using the portal to create electronic invoices or maintaining software to generate compliant electronic invoices.
While supplier networks are useful for some isolated industries, the vast majority of suppliers who submit invoices will likely not join the network. It is too outside their scope. The effort that has the least amount of friction is to provide an agnostic supplier portal with the ability to upload invoices that are scanned automatically to provide straight through data entry of invoices.