Use AP Automation to Master Your Vendor Management Process

It pays to invest in building strong, long-term relationships with your vendors. 

A good vendor management strategy is important to the health and profitability of your business. Good vendors go beyond providing the goods and services you need to operate your business. They invest in your success by sharing innovations, helping you solve problems, and reducing costs.

Innovations in accounts payable and supplier management automation make it easy for businesses to reap the benefits of good vendor performance management. Read on for five vendor management best practices you can use today with automation.

What is accounts payable vendor management?

Strategic vendor management is the art of selecting the right vendors, building solid vendor partnerships, monitoring vendor performance, and managing supply risks. It’s central to managing a healthy supply chain to meet your business needs. Mastering vendor management helps you achieve your business goals and maximize cost savings.

Accounts payable vendor management focuses on vendor invoicing, payment, and procurement processes. The main components of AP vendor management include:

• Processing vendor invoices: receiving, verifying, and approving invoices from suppliers
• Paying vendors: issuing payments and credits to suppliers
• Onboarding new vendors: assisting the procurement department by adding new vendors to internal accounting systems or ERPs
• Managing vendor documentation: gathering, storing, and organizing invoices, contracts, certificates, and other documents
• Dispute resolution: answering vendor questions and resolving invoice errors and payment disputes

Good vendor management hinges on AP teams performing these roles effectively. It’s about the workflows, systems, and integrated technologies that help AP work with suppliers so things don’t spin out of control. 

Let’s look at strategies you can follow to keep things running smoothly.

1. Optimize AP workflows to pay vendors on time

Payment is at the heart of vendor relations.

A fast and effective vendor invoice management process is crucial to paying vendors on time. Manual invoice entry, coding, verification, and approvals are slow and prone to errors. AP teams can easily get bogged down if something goes wrong or the volume of invoices increases. And when the process slows down, payments slow down.

How to use AP automation to pay invoices faster

AP automation solutions eliminate manual processes to shorten the invoice lifecycle. The right AP solution speeds up vendor payments in several ways:

• Faster invoice processing: AP automation solutions scan, code, and archive invoices faster than manual data entry
• Better vendor risk management: Automated 3-way matching verifies every invoice to detect potential risk
• Efficient approval routing: Solutions automatically route invoices to the appropriate approver and send reminders to ensure fast approvals
• Greater transparency: See transaction metrics and KPIs in real time to monitor invoice processing and payment performance

Begin by identifying the bottlenecks in your AP workflow, then look to AP automation solutions to see how you can automate them. For example, instead of manually keying in paper invoices, use an invoice scanning solution to digitize and enter your invoices automatically. 

2. Offer more payment options

In 2021, Stampli surveyed finance leaders on trends in supplier payments. Over one-third of businesses said they chose a specific payment method because their supplier preferred it.

Offering your suppliers a variety of payment options is a great way to build better supplier relationships. It allows suppliers to choose their preferred payment method, and it also lets you convince suppliers to switch to faster, less expensive payment methods such as ACH transfers. Unfortunately, it can be difficult to offer multiple payment methods if you still use manual payment processes.

Search for an AP automation solution that offers payment processing functionality. Switching to an automated solution will let you centralize your payment workflows and link payment processing more closely to your invoice management process. It also gives you access to a broad range of electronic payment methods that are cheaper and faster than cutting paper checks. 

If you work with international suppliers, you should consider a payments automation platform that provides international payments functionality. These platforms provide additional benefits to your vendors, such as faster payments via SWIFT transfers and Global ACH and protection from currency fluctuations. For maximum flexibility, look for payment-agnostic solutions such as Stampli Direct Pay that don’t tie you to a specific payment provider or method.

3. Streamline vendor onboarding

Vendor selection can be tough. Finding reliable vendors who supply high-quality goods and services at fair prices is crucial. The best vendors partner with you to help you grow your business – they see the supplier relationship as an investment. 

Sourcing, selecting, approving, and onboarding good vendors is a significant and complex job for most businesses. In AP Today: Bottlenecks, Benchmarks, and Best Practices, Stampli’s survey of 282 finance leaders across the US, 31% of companies said they had at least 500 unique vendor relationships. A streamlined and efficient vendor onboarding process simplifies the often-complicated task of selecting vendors and setting them up in your AP systems.

Manual onboarding is slow and error-prone and can put your business at risk of non-compliance with regulations if you don’t set up vendors correctly. Automating the vendor approval process with vendor management software is an effective way to streamline onboarding. For example, the vendor management system can automatically send an information form to a new vendor. Once the vendor returns the form, the system checks the form for completeness and then automatically creates a new vendor record.

Vendor management solutions like Stampli Advanced Vendor Management also feature brandable vendor portals to keep your brand front and center with your suppliers. 

4. Improve vendor document and contract management

Supplier relationship management involves a lot of documentation – and a lot of headaches. In 2021, Stampli surveyed finance leaders across the US about why they invested in AP automation. Over one-third said they adopted an AP automation solution because their teams were overwhelmed with paperwork.

The average business processes thousands of vendor documents. All those emails, SOWs, RFPs, certificates, vendor contracts, and licenses must be tracked and managed to ensure vendor relations run smoothly.

With a manual vendor document management system, it can be chaos. AP teams get overwhelmed with paperwork, and things fall through the cracks. And then everything grinds to a halt when a key document goes missing, and the inevitable wild goose chase begins.

An automated vendor documentation system streamlines and centralizes document management processes. It improves document management by:

• Capturing, storing, and sharing documents in a centralized repository
• Enforcing vendor compliance with contract terms and regulations
• Allowing stakeholders and employees to access documents from anywhere
• Managing document lifecycles and flagging when a document is about to expire

Automated vendor document management helps your procurement team perform risk assessment on a vendor during contract negotiations. They can access vendor documents and easily confirm if a vendor is compliant with company policies before purchasing from them.

Platforms can also automatically collect vendor information like 1099s, preferred payment methods, bank account details, addresses, and contact info from vendors, making it easier to keep vendor data up to date.

5. Centralize communications with vendors

So much about accounts payment management comes down to communication. Vendors want to know the status of their payments, and AP teams want a quick resolution of errors and disputes with vendors.

Unfortunately, many AP departments rely on emails and phone calls to manage vendor communications. Inevitably, emails go missing, and calls are forgotten. Vendors can send invoices to the wrong address or issue incorrect or duplicate invoices. The resulting miscommunication results in late payments, unresolved disputes, and frustration.

Many AP automation systems include a vendor portal where vendors and AP teams can communicate. Vendors can log in and check their invoice status or ask questions. AP staff can use the portal to ask vendors about erroneous invoices and discuss and resolve disputes. 

The automation platform simplifies and centralizes communications, builds collaboration with vendors, and keeps everyone on the same page. It logs every communication to prevent fraud and errors by enforcing due diligence, ensuring a complete AP audit trail, and preventing miscommunication.

Effective vendor management with Stampli

Stampli’s industry-leading accounts payable automation solutions use machine learning and AI to optimize and streamline key AP processes. Automating these workflows helps you eliminate slow and error-prone manual processes.

With Stampli, you can fully control your vendor relationship management. Stampli’s AP automation solution, combined with Stampli Direct Pay and Stampli Advanced Vendor Management, gives you the flexibility and power to build strong vendor relationships and achieve your business objectives.

The bottom line: Stampli is the ideal choice for effective vendor management. Contact Stampli today for a free demo.