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Vendor Self-Service – Now More Than Ever!

In challenging economic times push non value add tasks to vendors

The American economy and business landscape is as challenged and dynamic as it has been in recent memory. Increase in remote work-forces, inability of companies to fill positions, interest rates rising and an economic slowdown at hand are causing companies to make hard decisions. As organizations face the prospect of cutting costs to respond to slowing sales growth, what better time to implement a vendor self-service program. Lower costs for your company by shifting the burden (and the cost) for vendor related, non-value-added activities back to the vendor.

Vendor self-service, or supplier self-service if you prefer, is the process by which vendor management tasks are directed away from the buying company to the the vendor, or selling company. In a company where vendor self-service is not being fully utilized the buying company dedicates human resources and expends time and effort communicating with the vendor to get data and documents that are necessary to perform the tasks to setup a relationship, facilitate transactions, insure compliance and resolve a dispute. These processes tend to be very manual, labor intensive, slow, and time constrained by varying time zones of the vendor companies, making contact and research all the more difficult. In the current economic environment with your vendors also trying to do more with fewer people these activities can often stretch out for days or even weeks. The result of these inefficiencies can be labor hours being spent on non-value add activities, poor use of working capital, frustration from lingering unresolved disputes, uneven cash flows, and missed discount opportunities to name only a few the costly manifestations of not fully implementing a vendor self-service program. The goal of a vendor self-service initiative is to redeploy human resources to more value added tasks by transferring the responsibility of vendor centric activities back to the vendor. Let’s look at the tools and processes that you can deploy to establish a robust vendor self-service program in your company.

So what processes lend themselves to vendor self-service? Some of the more common processes that benefit from a vendor self-service program are Accounts Payable Automation, Payment Dispute Resolution, Vendor Onboarding (Supplier Onboarding) and PO Dispatch & Update. Each of these functional processes can benefit from a vendor self-service program facilitated through the use of cloud hosted Vendor Portals or Supplier Portals. Let examine each area:

Vendor Onboarding – Of course before any vendor relationship can be established, the procurement and AP departments must “onboard” new vendors. The process of vendor onboarding involves collecting all the data and documentation need for a company to meet all of the compliance requirements required to qualify to be a vendor for the buying company. This process is very labor intensive for the buying company who is charged with collecting and validating the voluminous information they must gather. With a self-service vendor portal, potential vendors can be directed to log on and start supplying the necessary documents and data required by the buying company such as insurance certificates, tax documents, licenses and certificates, contracts, and the data required to complete transactions such address, product, and contact information. This information can then be validated, in many cases through automated validation tools inside the portal, i.e., TIN Check which can validate the legitimacy of a companies Tax ID number or SSN by matching against the IRS database. There are numerous other validations that can be done through automated systems to reduce or eliminate these time consuming activities. In addition to onboarding a vendor by collecting and validating information, the self-service vendor portal can also act as an ongoing vendor management tools by tracking expirations for insurance and licensing and sending automatic notifications when a vendor is approaching non-compliance so they can take action in a timely manner to maintain their standing as an authorized supplier. Many companies also use this tool with their existing vendor base periodically to insure their vendor master is clean an up-to-date for their active vendors.

Accounts Payable & Vendor Portals – AP can benefit from a vendor portal (supplier portal) in two main ways, by directing vendor payment inquiries through the portal and delivering the answers based on status of a payment in the buyers ERP or AP Automation application. Instead of a vendor calling into a company and having the buyers personnel research the status of a payment then responding, the vendor can now login to a portal 24×7 from anywhere in the world, including using a mobile device remotely, and ascertain the payment status with no intervention or effort on the part of the buying company. Additionally, the vendor can submit invoices or other payment documents to the buying company directly through the vendor portal by either filling out a web form, use of PO flip capabilities, or uploading a billing file. The information provided is then read and ingested into the buyers payables systems and processed for approval and/or payment without the need for buying company personnel. No need to open mail, scan documents, data enter invoice information or any of the other costly manual activities found in a traditional AP process.

Dispute Resolution – One of the more labor intensive processes in vendor management can be payment dispute resolution. A vendor may dispute the amount a buyer paid, or is going to pay, which differs from the invoice generated by the vendor. There may be many reasons a buying company disputes a payment amount but the process of resolving those disputes can be very labor intensive, slow, and burdensome for the buying company. There is also implications for the vendor (and their cash flow!) who is waiting for their money, which has likely already been outstanding for some time by extended payment terms from the buyer. By allowing the vendor to submit disputes through the vendor portal along with relevant information and documentation, the buying company can efficiently research and communicate through the portal with the vendor and come to a resolution much quicker, with more transparency, and requiring far less manual effort. In addition to a more efficient process for the buying company, you are also helping to maintain a financially healthy vendor base thereby lowering supply chain risk.

PO Dispatch & Update – Vendor self-service does not just benefit the AP and finance departments, the purchasing function for the buying company can also reap substantial benefits through vendor self-service by automating the dispatching and updating of PO’s and RFx’s. Through the use of the same cloud hosted portals described above, purchase orders, RFPs, RFQs, RFIs, etc. can be automatically dispatched to vendors who can then logon to the portal and take action, i.e., acknowledge, accept, reject, or pend. The solution ICG offers can also proactively require the vendor to provide real-time updates on critical, time sensitive purchase orders to help you manage the flow of goods and services through your supply chains. Using this automation tools eliminates the needs to emails, phone calls and manually tracking the progress of orders.

These are just some of the more common way a vendor portal based solution can drive vendor self-service and push the manual tasks of dispatching, collecting, researching, matching, validating and communicating from your staff and your budget back to the vendor. After all, the vendor wants to sell you goods and services, why shouldn’t they be the ones to pay for that privilege! Contact ICG Consulting today to learn how you can implement a vendor self-service program or schedule a demo of one of our world-class vendor management solutions.