Choosing a third-party service or product for vendor management is an important step in your AP process. You’ll want a solution that’s both able to keep pace with your business payments and also to secure sensitive vendor information from fraud and outside threats.
The process can be daunting at the outset, but there are some helpful hints for finding the right third-party vendor management solution for your company.
What’s important in a vendor management solution?
Hosting sensitive vendor data in-house is ultimately a risk for your company. A trusted service provider that has a long history of demonstrating security controls and compliance is your best bet for outsourcing the risk. In the payment’s industry, SOC compliance is considered the highest standard. Regular compliance audit reports ensure that the service provider you are evaluating is on target and following proper controls. This ensures the integrity of your vendor data and keeps sensitive information safe and out of the hands of threats or those internally who would access it for nefarious reasons.
If your business-to-business payment workflow is manual, vendors most likely have your AP team on speed dial in search of missing checks and late payments at the end of each month. For this reason, a great deal of accounts payable's time is caught up in putting out these types of payment fires when the focus should be on strategic initiatives for your business. A vendor management solution can completely offload this burden from your plate with a professional, fully staffed team to handle incoming payment related questions that will shave hours, if not days, off your payments process.
For a truly full-service vendor management solution, customers provide vendor lists for a merchant matching process, to determine which of the customer’s vendors accept electronic payments in the form of ACH or credit card. In this process, vendor lists are scrubbed for outdated payment history and matched to a preexisting network of electronic payment-enabled vendors. Card-based payments are given first priority for those vendors who accept, as it provides the highest rate of return on every payment the customer makes.
By setting the appropriate digital approvals in place through an electronic payments platform, your team may not even need to be in the office when it’s time to pay vendors—a miracle when you consider the craziness that occurs for many AP teams at the end of the month.
A third-party vendor management solution not only eases the stress on your AP team, but it also relieves vendors from having to chase after what’s owed them. The majority of vendors are thrilled to receive their money sooner than ever before, and to have their questions answered promptly instead of contacting the payor directly or waiting until someone gets back from vacation to address their question.
Handing responsibility for payments over to a third-party is a big step, no doubt. You’ll want to know that your vendor management solution will indemnify 100 percent of vendor payments. That means they assume 100 percent of the liability for correctly paying vendors according to your instructions. A secure payments solution provider has the ability to prove that every payment transaction they facilitate is bonded and insured with a payment guarantee or warranty.
The obvious benefit of going with a vendor management solution is the time and cost savings your AP department will reap. Just think of how much time you spend printing, stuffing and mailing checks, collecting manual signatures from approvers, and chasing down remittance information while craning your neck to hear the vendor who is impatiently demanding more information from you on the phone. Chances are, offloading that headache alone is worth it.
It isn’t just efficiency you should be concerned about, but the overall benefit to team morale. Automating the parts of their jobs that are stressful, frustrating, or tedious shows that you care to leverage their high-level value and contributions, instead of just expecting them to fill in the gaps of immediate needs. Companies that are willing to leverage and invest in technology for menial tasks instead of assigning it to staff will win in the long-term.
With these tools, you have the power to evaluate the most comprehensive, secure, and efficient vendor management solution for your business. Don’t be quick to accept a vendor management solution that only provides partial vendor enablement or unreasonable spend thresholds to meet before earning card-based rebates on business payments. Demand transparency on security measures and compliance with any vendor management solution before you leap.