Vendor onboarding is a key step of the supplier relationship as well as the source-to-pay process. That’s why companies should make it as smooth as possible. Automating the process can both secure it and make it easier and more efficient. For example, a company that fails to perform due diligence on its new vendor could order from and pay the vendor, then lose the funds when it realizes the vendor is a scammer.
Trustpair offers integrations with vendor platforms and prevents the financial implications of vendor fraud. Our risk management platform secures the onboarding process by automatically checking vendor data and making sure you’re paying an actual vendor, not a fraudster. Request a demo to learn more!
Why is vendor onboarding important?
Vendor onboarding involves collecting all the necessary information to create a business relationship with a new supplier. Once onboarding is completed, third parties can help supply and produce your goods, products, and services.
The process is important to set up a solid relationship and allow it to get started on the best foot possible. Also, supplier due diligence ensures that data collection is consistent and helps to combat supplier risks (learn more about supplier risk management here.)
By discussing your business with the organization, you can be aligned and start off on the right foot.
Some vendors may push for verbal discussions and prefer the process to be less formal.
However, by continuing with the procurement process and filling out a vendor onboarding form or a vendor onboarding template, expectations can be set in stone. That is the start of a successful supplier experience. At this stage, it’s all about setting the right communication channels and making sure there aren’t any red flags in terms of compliance, fraud risks, or business practices.
Why is supplier risk management important?
In the modern workplace, complex business environments mean that supplier and third-party risks need to be managed.
This is especially the case with large-scale international enterprises that work with hundreds of different vendors on a daily basis. Risk management prevents a loss of income, reputational damage, and a poorer standard of service.
Suppliers that are onboarded poorly and with a lack of care can cause all sorts of problems for your organization. In the long run, it can cause less production and fewer sales, bad communication as well as reputational consequences.
Challenges that may be facing suppliers are:
- Vendors face risks of cyber-attacks and data breaches like the BBC and British Airways suffered which led to personal data and in some cases, bank details being stolen. This type of risk affects more and more organizations and can create financial and reputational damage.
- With increased turnover rates in companies, training time is necessary to offer consistent quality service. Employees stay in businesses for less time than they used to: this can easily affect your suppliers and the goods and services they provide.
- Financial instability – the poor financial health of suppliers can lead to delayed or stopped processes in the organization. For the buying company, this means less – or no – stocks and in the long run, fewer sales.
- Compliance risks – if a business fails to comply with legal rules and best practices of regulatory standards, this can lead to penalties, fines, and damage to the reputation
- Quality inconsistencies – one of the requirements of organizations is to keep production standards high to avoid the risk of a loss of customer trust and reputational damage
- Geopolitical risks, as the Federal Reserve warned that these risks pose a threat to the global financial system. Conflicts can halt production and lead to lost sales
- Environmental, social, and corporate governance (ESG) risks – ensure suppliers work with the international standards of environmental and working conditions
- Social media risks – small issues can go viral and turn into a crisis
Baptiste Collot, Co-Founder and CEO of Trustpair explains : “Risks are more important than ever because businesses are more and more interdependent. And we’ve seen this with the COVID crisis: it put the world economy under a major strain. Everything from transportation to manufacturing was suddenly threatened.”
What are the key steps of a successful vendor onboarding?
Take a look at this vendor onboarding checklist to ensure a secure, streamlined, and smooth flow:
- Exchange information
- Verify the information
- Discuss expectations
Exchange information
Contact the supplier to exchange information between yourself and the vendor, this is the first step to supplier onboarding. This step is important so that both parties go into business with full transparency.
The information checklist to provide to vendors includes:
- Company overview
- Code of conduct with the vendor
- Project information
- Billing contact information
- Feedback forms
Be mindful that asking for too much information right away could slow down this potential relationship and even place some doubt in the mind of the supplier. Remember they are also testing you out and completing their due diligence on you before they sign any contract. Vendor onboarding is a two-way-street process and clear communication is important for a good business relationship.
Verify information
The next step is to make sure that the documents and information given are correct and that it aligns with the company’s expectations, regulations, and international blacklists. Compliance with international regulations and legal requirements is also key at this stage, to avoid fines or business disruptions in the future.
This is where solutions like Trustpair can come in and take a job off your hands. The platform will automatically check vendor data to ensure you will be paying a genuine vendor and not a fraudster so you aren’t losing out financially.
Discuss expectations
It is helpful for the vendor team and the company to be on the same page. Both companies need to outline their needs and expectations and any questions so you can be aligned in a single approach going forward. Like in all relationships, communication via human interaction is important to build a stronger and more efficient process of vendor onboarding.
Create and agree on key performance indicators (KPIs) as a tangible way to measure what success and efficiency on tasks look like for you both. At this stage, it is also helpful for the vendor to be guided on what the business processes are. While automation is a big help in making vendor onboarding efficient, it’s important to keep a human touch at this stage of the relationship, through clear communication and expectations.
Learn all there is to know about vendor onboarding in our latest white paper, created with JAGGAER.
Why you should automate your vendor onboarding?
Digitalization and automation have their (many) benefits. Companies can streamline workflows, save money, limit errors and improve efficiency. They can also create more time for employees to work on other tasks.
By automating the vendor onboarding process flow, there are benefits too:
- Streamline workflows
- Secure the process so you don’t lose out financially
- Kickstart a positive working relationship between your company and the supplier
- Save time and gain efficiency
- Ensure good communication thanks to specific features and workflows
- Save money
While Trustpair isn’t a specific vendor onboarding software, it helps to secure new suppliers via native integrations with your risk management portal (like JAGGAER, Ivalua, etc). The platform also combats the financial effects of vendor fraud. Trustpair does this by aggregating vendor data from available data providers and datasources. It assesses the reliability of your third-party data, and continually monitoring your data for anomalies and risks. Our software will ensure your vendor database is healthy and updated throughout the entire payment chain thanks to account validation.
To conclude…
Vendor onboarding needs to be straightforward. Master vendor onboarding applications by swapping information, verifying this information, and exchanging expectations. Trustpair can secure the vendor onboarding process by automatically checking vendor data so you know the vendor that you are paying is genuine. Our risk management software also helps you stay compliant with legal requirements and offers features like customized workflows, key fraud analytics, etc.
