Companies with contingent labor programs, whether small or large, often struggle to maintain smooth communication and relationships with their vendors, especially when talking about finances. Working with vendors requires a keen eye for detail and proper task management. There are many processes to complete, neverending data to be analyzed, plenty of questions from vendors to answer, and an array of issues to resolve.
Vendors also face several challenges when dealing with companies: invoicing problems, missing payments, reporting errors, bugged systems when introducing and changing data, and so on. Experiences like these not only affect the overall performance of your vendors but also the results for, and management processes of your company.
Rather than focusing on the difficulties, organizations can take a few actions that will not only be appreciated by their vendors but will also contribute to keeping them properly aligned while making internal processes easier.
In this article, we’ll provide you with three solutions you can implement with the aid of a vendor management system (VMS) to help your company navigate vendor finances with ease.
1) Build a Consolidated Invoicing and Billing Process
Invoicing is often the single top concern when it comes to the financial management of your contingent labor program, as it not only affects the company’s budget but can also generate difficult situations with vendors and contractors. Companies receive a significant volume of invoices from contractors in several different directions. It’s possible to receive 20 invoices from different vendors every week—a figure that can be multiplied by the number of contractors involved.
Without consolidated billing, your accounting system will be forced to handle a huge number of documents every week. This can potentially cause delays and open a path for human errors that can have a budgetary impact on your company, your vendors, and any contractors involved in the process.
Organizations must make it a priority to eliminate this kind of budget-related chaos. To do so, it’s important to understand how the current invoicing process works. Are invoices going to a central repository? Are they going to the hiring managers? Are they going to accounting? How are they getting approved from a timesheet standpoint?
When faced with the complexities of a multi-layered invoicing process, organizations need a system that tracks all working hours and generates one invoice comprising approved timesheets from every vendor. The more consolidated the process is, the better. A VMS gives organizations the flexibility to correct mistakes and make adjustments as needed, ensuring that invoices are processed, sent, and paid accurately and on time.
2) Use Technology to Create a Flexible Workflow
Technological tools should give companies and their vendor community flexibility and ease for invoice adjustments while maintaining a historical tracking mechanism (in the form of time/date/user stamps) that provides transparency for everyone. Organizations should be able to adjust approved invoices for hours, rates, and expenses, which can significantly reduce the need for duplicate billing and also complement their compliance or audit requirements.
Consider a scenario where a contingent worker submitted 40 hours of work. The submission was approved, the invoice was generated, and it’s received the next week. However, in the process, someone realizes there was an error—the employee was out sick for one day, and only worked 32 hours. The system (like a VMS) should work with the vendors and the company to adjust that timesheet, subtract the eight hours in which the worker wasn’t there, arrange reimbursements, and create a correction. Companies can now rely on this kind of system to process each of these steps easily on their behalf.
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3) Periodically Evaluate Your Vendors
The performance of your vendors can greatly impact your finances and the overall stability of your program. Those vendors that fail to bring in quality talent or those that have a high turnover rate can generate costs and difficulties any company would want to avoid.
That’s why vendor scorecards are essential in any vendor management program. Using your VMS, you can collect all the data you need to score your vendors and create efficient, easy-to-read documentation that tells you where there’s room for improvement.
You can also perform regular audits of your vendors to learn how often they meet their requirements ahead of their deadlines, as well as how often their documentation is completed. If you need help, VectorVMS’s Shared Managed Services (SMS) program managers can help you determine which items need a review before engagement and which can be reviewed in a more global audit.
SMS can help you analyze everything associated with managing a vendor. For example, it can evaluate how a certain number of your vendors are performing, what’s their fill rate and their turnover rate, among other factors. It works with managers to develop these parameters and evaluate them.
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You Can Always Use an Extra Hand
There’s a lot to do when it comes to dealing with vendors, and there’s also a whole list of things that the Shared Managed Services (SMS) team can do to help you improve the quality of your program. It can help educate on, and bridge any gaps in, processes like consolidated invoicing and processing, vendor scorecards, vendor training, and other activities you might not feel confident completing on your own.
If your company is struggling to identify what can be done better with its vendors and how processes can be optimized for everyone, the SMS team can make sure everything is successfully completed and lined up properly for all parties.