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Your Vendor Approval Process: 10 Tips to Make It Better

If it isn't broken, why fix it? That’s the general sentiment when it comes to companies’ current vendor approval process, and the process that’s in place for adding new vendors. Why is there so much hesitation around optimizing these processes? The simple truth is that doing anything new can be risky. The risk is that you’re talking about changing a process that has worked and is probably not all that bad. It’s been my experience that accounting and finance folks usually assess whether or not a change is worthwhile by weighing the difficulty of the change against the benefit and impact to the organization. That’s why contemplating a new vendor approval process can sit on the back burner.

10 Tips to Make Your Vendor Approval Process Better

Evaluation is important, because over time a process can get complacent. The down side with a complacent process is that people become overly familiar with it, start to find ways around it, and get lackadaisical resulting in errors.

When evaluating your vendor approval process, here are 10 things you should consider:

10. Evaluate paperless options – Paper has intrinsic problems, because paper invoices can get lost and can have incomplete information. Also, paper has to be manually passed around for approvals, which creates lengthy approval times and can result in late fees. When you automate your AP processes, these problems dissipate.

9. Let them know you are watching – If you are automated, then don’t make it a mystery that the system tracks  everything about the process. Therefore, there is visibility into every part of the process and late approvers, etc. are easy to  identify. If you aren't automated, then make sure that you have internal audit procedures to ensure everyone is held  accountable.

8. Define “approval” – The people who typically feel burdened by having to approve are usually the people that don’t feel as though they need to be involved in the approval process. It’s important to define what you want the person to approve, such as approval for budget or approval for completed work.

7. Use dollar breaks– Putting automatic dollar breaks in the invoice approval process is a great way to ensure that employees only see and approve vendor invoices that are relevant to them. For example, the CFO might only need to approve invoices that are more than $10,000, while invoices that are less than that can be approved by the Controller.

6. Don’t be the bad guy/gal – When you automate, make the automation software the “bad person”. The beauty of an automated AP process is that there are rules in place for approvals, and the software will do the job of sending out reminders for invoices and payments that need to be approved.  The software does it automatically, so that not only do you not have to think about it or manually run a report from an excel spreadsheet, you also don’t have to go in person to address the approval or have the email come from you.

5. Make it easy – If the approval process you have in place is easy to understand and follow, then the people that have do the approvals will be inclined to approve things sooner and with more frequency. An example of making things easier would be to have all vendors in a queue with an email reminder.

4. No repeats – Make sure that a person is not in the approval process more than once doing different approvals.

3. Gangs all here – Certain vendors can be approved by more than one person, so it lessens the burden on one person to approve vendors and speeds up the process.

2. Plan your work – When people know their role in the approval process, then they understand that there are dependencies to their approval and will be more likely to approve faster.

The Number 1 Tip – Go Mobile! – People think that if they are at a standstill, then they need to be on their smart phone – give them the joy of doing work while they are waiting. If you use an automated AP process, then they should be able to log in to a portal and approve invoices and payments from wherever they are.

If you're looking for more great tips, download our eBook: 15 AP Tips for Success in 2015.

by AvidXchange

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