13 Ways to Maintain Vendor Relationships

Managing vendor relationships can be a challenge, especially as organizations make more and more demands on their vendors, such as improved pricing, terms and shipment quality.

On the payables side, vendors are being asked to invoice using e-invoicing or EDI, to accept payment via ACH, EFT or credit card and to register and work with third parties in order to get paid.

What can accounts payable do to help improve relationships with their vendors?

1. Pay invoices accurately and on time per the agreed upon terms of the contract or purchase order.
2. In customer service, the important thing is communication, communication, and communication. It is important for AP to communicate with vendors from the very beginning of the relationship and to set expectations upfront. One way to do this is by sending a welcome packet communicating what is required from the vendor to ensure that they get paid accurately and on time. Some items that could be included:
   • Welcome letter and informational packet;
   • vendor registration form;
   • proper channels for resolving problems;
   • who and where to send invoices and what information needs to be on the invoice;
   • policies regarding discounts and partial payments;
   • W-9 or W-8 and a link and instructions for using a vendor portal if appropriate.
3. Make friends with procurement. Remember that AP and purchasing are part of one procure-to-pay process and both have the same goal — to take care of their “customers” the vendors.
4. Ask your vendors what they need to do business with you and provide it to them whenever possible.
5. Set up a page of “frequently asked questions” (FAQs) with answers and post to the organization’s website or vendor portal so that vendors can get answers to basic questions.
6. Reach out to your vendors to get a better understanding of the problems that arise and can be fixed.
7. Create training scripts that staffers can follow when responding to common vendor questions such as “Why haven’t you paid this invoice?” or “Why was this short-paid?”
8. Document notes and get vendors’ first/last names each time you talk to them so you can use them as you speak on the telephone.
9. Don’t point fingers when errors are made on their part — focus on the resolution first, and then — when necessary, as with recurring issues — work respectfully to fix the cause of the issue.
10. If there is a problem with an invoice, let your vendor know upfront — don’t just short pay the invoice with no explanation. If you are going to short pay rather than wait for re-invoicing, create a form that contains the reasons why a payment does not match the invoice amount and include it when a payment is different than expected.
11. Keep the lines of communication open. Maintain a good rapport with the vendor so that when special circumstances arise you are in a better position to negotiate. Ensure you communicate with vendors regarding other invoicing issues such as incorrect terms, pricing, shortages and duplicate charges.
12. Ensure that you and your vendors agree as to when the “clock” starts when taking discounts.
13. Review statements regularly to stay on top of potential problems with missed or misapplied payments. Keeping accounts clean and up to date will ensure that vendors are paid promptly and are advised if you haven’t gotten the invoice.