The first step in developing a lasting relationship with your suppliers is through efficient onboarding. A supplier who experiences a professional introduction to your company is left confident in other aspects of the business, including what is for them, the most important (and often-painful) process of being paid in full and on time.
For the buyer, the onboarding process offers a level of protection through establishing a partnership with the new vendor - developing a profile in their supplier database, confirming payment terms and ensuring the organisation meets its regulatory and ethical requirements. Depending on the size of the business and the scope of works, a more in-depth onboarding process can be employed to further vet suppliers, evaluating any risks that may impact on your bottom line.
When onboarding any new vendor, buyers should use Australian Business Register resource ABN Lookup to ensure the legitimacy of the company, confirming details such as the ABN and legal name, as well as checking the taxation (or GST) to ensure the correct payment amount has been requested.
It is good practice for a buyer to confirm available payment means any time they are establishing ongoing supply arrangements. On top of this, in order to ensure prompt payment for suppliers, especially those providing longer term arrangements, buyers should collect relevant information in advance. If the payment is being made via direct deposit, details required include the supplier’s account name, BSB and account number. Businesses should also consider utilising PayID as a viable payment option, allowing a supplier to nominate their ABN as their PayID. This method of payment is particularly useful for small businesses as it provides an additional layer of authentication, avoiding one of the more common types of invoice fraud.
It is important that buyers undertake due diligence in relation to supply chain risks when considering entering strategic supplier relationships. Buyers across Australia and the world have learnt firsthand the risks associated with relying on cross border and import supply in the wake of the COVID-19 pandemic. For the first time (but arguably not the last) the nation was sent into a tailspin over toilet paper, providing an exceptional metaphor to explain the perils of largely importing a nation’s supply of essential items.
A wholistic vendor onboarding process alleviates risks associated with the viability of a vendor, evaluating whether an organisation is financially and operationally stable, providing the added security of evidence of insurance and appropriate certifications such as food safety compliance.
Robust processes around vendor onboarding provide safeguards for both the buyer and the supplier. To ensure a company is getting the most out of vendor onboarding, management should consider an independent assessment of current practices, and depending on scale may benefit from implementing supplier self-service capabilities to maintain accurate information.
Remember, first impressions last, so invest some time and potentially money in developing rigorous vendor onboarding processes today.
This article is: Part 2 in a 2-Part Series.