Depending on your company, there can be separate departments involved in the Procure-to-Pay (P2P) process – each with a different focus. For example, the Procurement/Sourcing should have a separate policy since their focus may be items such as vendor risk management, identifying strategic partners, and reducing costs. Even AP itself at a higher level may be focused on invoice submission/approvals, adherence to the Purchase Order policy, processing payments, accurate general ledger coding, etc. Each can quite different from a focus on onboarding vendors for the purpose of payment for goods and services. For this reason, I recommend a separate policy or section specific to vendor onboarding.
What Does the Vendor Maintenance Team Need?
The AP Vendor Maintenance should have three sets of instructions for the process of onboarding a vendor:
- One for the AP Vendor Maintenance team with detailed field by field instructions for how to add and edit a vendor in each of your ERPs. It should also include what validations and approvals are required, as well as document storage. To download a free sample desktop procedure on my site click here.
- One for your suppliers that tell them how to do business with you. This can include how to submit an invoice and how to request updates if their information changes. Some Vendor Maintenance Teams call these Welcome Packets and will send to any newly created vendors. If you have a vendor self-registration portal it is common to provide a Vendor Guide instructing them how to use the portal. Customize what you provide depending on whether the Vendor Team deals directly with the vendor or if the internal team members gather the required documentation from the vendor and submits to your team.
- One for internal team members to tell them how to do business with you. This is separate from the document you provide to the supplier because it can include internal-only information required for setup such as how to determine the account group or company code that the vendor will not know. Yes, this is your Vendor Onboarding Policy.
Create Your Vendor Onboarding Policy
Your Vendor Maintenance Policy should provide instruction to internal team members on the following:
- What documents and are required to be collected from the vendor based on different criteria. For example, if a vendor prefers to be paid via electronic payment, document that a banking form, letter of credit, etc with banking details is required to be submitted with the request. Include signature requirements.
- What vendors, if any, are not applicable to be paid through AP and therefore requests for setup will be rejected. A great example is that many companies will not setup hotels as a vendor, but rather require the use of Corporate Cards to cover meeting or conference costs. This eliminates the potential of duplicate payment (payment via Corporate Card and an invoice being sent to AP for processing). For a bonus, include the process or reference the applicable policy.
- How to submit the request to vendor maintenance. This can be via a vendor self-registration portal, an email address or a department floor. Also include contact information for questions or follow-up on the request.
- Service Level Agreement (SLA) Timelines. Let the internal team member know how long it should take to process their vendor request. Be sure to build in enough time for approvals, validations and confirmations where required. Typical time is 24-48 hours but is unique to your process. You can also include the timelines (and criteria) for urgent requests, although I don’t recommend it because it may increase urgent requests and this process needs to be discouraged in this era of vendor fraud.
- Your Escalation Process. Include a formal process for resolving issues with the request. Issues can include if the request is out of SLA (late) or if the documents are invalid or not submitted and the internal team member or vendor is pushing back on Vendor Maintenance’s assessment. This saves unprofessional pushback from internal team members to your team. You can also use this process to handle urgent requests.
- Consequences of not following the policy. This does not have to be punitive or confrontational. It could be as simple as keeping track of urgent requests for example, and for any internal team members or whole groups that are consistently on the list, meet with the group to discuss what their issues are and how you can work together to get in line with the policy.
- Other instruction to consider:
- What approvals are required and when
- How to determine which company code, account groups, etc should be used for their vendor request
- How to determine the correct payment terms, or what is required if they request any payment term other than default (such as a contract)
- Payment process and/or timeline based on the payment method
- The expected disposal process of the submitted vendor documentation once the request is complete (you don’t want them retaining it in their desk drawer or C drive)
- Anything else they need to know about your process. A great way to determine what internal team members ask is to survey the Vendor Maintenance Team and/or the Help Desk for frequent asked questions, then include those in the policy.
You’re Not Done Yet
Once you have finalized your Vendor Onboarding Policy and it has been approved by leadership – communicate to internal team members and stakeholders. If you have a company intranet page – add it. If you have changed any parts of the vendor onboarding process (or even if you haven’t) hold multiple training sessions and if there are stakeholder groups that submits a large number of requests – meet with them separately to review the policy and discuss and resolve any issues.
Originally posted on www.debrarrichardson.com
Debra R Richardson MBA, APM, APPM, CPRS
Debra is an accounts payable speaker, consultant, and trainer with over 20 years of experience in AP, AR, general ledger, and financial reporting for Fortune 500 companies including Verizon, General Motors and Aramark.
For the past eight years, Debra has focused on Global Vendor Maintenance, and implemented a vendor self-registration portal for 140k+ global vendors across five Accounting Systems/ERPs. In her consultancy, she focuses on internal controls and authentication to prevent fraud in the vendor master file.