Vendor Management Tips From the Experts Themselves
Tips from Experts in Accounts Payable, Finance, Cybersecurity, and More
by Sarah Greenberg
Content Manager
PaymentWorksVendor Management Tips From the Experts Themselves
This blog was initially published in April 2023 but was updated in November 2024 for accuracy and comprehensiveness – and because we’ve received so many more useful vendor management tips over the past 18 months!
We first released this article as a follow-up to our popular in-person event, The Strategic Importance of the Vendor Master File.
We published the top three takeaways from the event, which was a smash hit among vendor managers everywhere (hack for those who couldn’t make it: catch up on live event coverage here, here, and here.)
Now that we’re nearing the end of 2024, we thought we’d expand the article to include even more vendor management tips. What can we say? We’ve talked to a lot of experts and they are chock full of wisdom we’d like to share with you.
Without further ado, please enjoy (and implement!) the top vendor management tips below.
Table of Contents
Takeaway #1: Support from Leadership is a Non-Negotiable
Takeaway #2: Protecting Against Fraudsters is Getting Harder to Do
Takeaway #3: The Ideal Vendor Management State Is Possible
Takeaway #4 (2024): Three Immediate Actions to Prevent Fraud
Takeaway #5 (2024): Address the Culture Problem
Takeaway #6 (2024): Eliminate Compliance Gray Area
Vendor Management Tips Are Just a Beginning
Get Ready for Vendor Management Day 2024
Want Help Aligning Teams On These Vendor Management Tips?
Interested in More Vendor Management Tips?
Want Personalized Guidance on Implementing These Vendor Management Tips?
Takeaway #1: Support from Leadership is a Non-Negotiable
Let’s face it. The vendor desk is understaffed, underpaid, and underappreciated.
In fact, a typical salary for an Accounts Payable Specialist breaks down to $12-$15/hr., according to Debra Richardson of Debra Richardson LLC. That’s what Taco Bell employees make–and they get free food!
Like the U.S. Mint Police guarding the country’s gold at Fort Knox, vendor maintenance is the new frontline against vendor fraud. Yet, vendor desk staff get paid like fast food employees.
Something’s wrong and it needs to change. That’s where executive support comes in.
Your organization’s executive team–and other departments affected by your work–must know how critical your role is.
Vendor Management Tips and Action Items
- Host regular lunch n’ learns/brown bags. Invite leadership teams and other departments who are affected by your work. Show them what the vendor desk does and why this work is critical to the entire organization. Share data about fraudulent activity that your office has experienced/mitigated, as well as the state of vendor fraud in the U.S.
- Tell human stories. Collect the story behind each fraudulent activity: what the fraudster tried to do and how you missed or stopped it. Share what you see in the news. Human stories get attention. Build up an arsenal of stories to tell when speaking with leadership.
- Present your protocol to your leadership. Show them your process, how often you actually follow it, where pressure to make exceptions comes from, e.g., name names, and what is at risk if pressure for exemptions continues.
Takeaway #2: Protecting Against Fraudsters is Getting Harder to Do
A chilling statement: “The pandemic indoctrinated an entirely new generation of fraud actors.”
This came from Linda Miller, CEO of Audient Group.
These days, fraudsters don’t have coding skills. They can buy SaaS on the dark web, rent a bot for the day, and access low-code or no-code technology to help them carry out fraudulent activity at scale.
In other words, the barriers to entry for fraud have reached an incredible new low. And unfortunately, most organizations don’t understand how adversarial these threats are.
Scams are also becoming more sophisticated with voice technology. Fraudsters don’t just rely on email anymore, they use voice spoofing technology for phone and video calls. They spoof phone numbers. They text.
Expecting the vendor desk staff to keep pace with the ever-changing fraud schemes and tech is an impossible task. And with no help forthcoming at the federal level, organizations need to defend themselves.
Action Items
- Have a written process in place. Check if you even have one. Go on, I’ll wait. If you do, bravo! Dust it off and update it if you haven’t yet in 2023. If you don’t have one, make it your goal for this quarter. Capture the process in written form. Call it a policy. Treat it as such.
- Run your employee list against your vendor list. Someone might try to create a fake company and pay themselves. Linda Miller’s thoughts on this? “I haven’t seen an organization yet that didn’t find something fraudulent when they did this exercise.” Your own people know your process better than anybody, so they know how to beat it.
- Audit and be truthful. Gather your team and ask, “What is our written process v. the process actually in action?” Identify areas where there’s a gap in technology, where there’s not a streamlined process, or where you’re relying solely on a single person.
Takeaway #3: The Ideal Vendor Management State Is Possible
As the saying goes, you can’t be what you can’t see.
The ideal state in vendor management does exist and can be possible for your team. You just need to visualize it first.
That’s what we had our panelists do.
If all processes were optimized, if you were caught up on everything, what would you get to do or think about? What data would you collect?
Here’s what our panelists had to say. You can glean several vendor management tips just from their answers.
- People-growth. “I measure my success in seeing someone who started as a File Clerk or Document Specialist go on to a senior position because there was growth and opportunity. My vision is to orient my team and all the teams that touch it.” Amanda Lockhart Davis, Director of Financial Disbursements, UVA
- Data on supplier diversity efforts, sustainability efforts, and social responsibility. “When that data is good, I can’t imagine all of the insights I can pull.” Adeline Coe, Interim Assistant Director of Procurement & Supplier Diversity Services, UVA
- Invoice history data, fraud/risk data. “Our hope is to get to the point where we can help you figure out how much you’re spending on state v. federally diverse businesses, where strategic initiatives are not being supported.” Grace Mabie, PaymentWorks
Action Item
- Gather your team and brainstorm about your ideal vendor management state. What would your days look like? What work would you be doing? What data would you collect? How might you interact with leadership and other departments?
Takeaway #4 (2024): Three Immediate Actions to Prevent Fraud
Earlier this year, we hosted the virtual event, “Vendor Impersonation Fraud in 2024,” where Chris Arehart, Jim Vogt, and Angela Sarno discussed everything vendor managers needed to know about bad actors and threats.
As part of that discussion, they offered three immediate (and pragmatic!) things organizations can do to mitigate fraud risk, which you can watch in the clip below:
Action Items
- Name the person who owns fraud risk. In other words, who does this ultimately roll up to? Too often, there’s not a clear owner for this type of risk. This creates gaps and gateways for bad actors looking for an in.
- Conduct a one-question audit. Ask “what’s our bank account verification process?” Vendor managers should be able to identify the process for verifying that a vendor they’re going to pay any amount of money to actually owns the bank account for the info they’ve provided. Spoiler alert: you can’t just call the bank to check. However, if you can answer that one question, then you can start to understand what your risks are.
- Accept that you are a target. Act accordingly.
Somewhere, some fraudster is targeting your organization. How will that change your process?
Takeaway #5 (2024): Address the Culture Problem
With all the different types of social engineering fraud out there, things are getting dicey. Our own Angela Sarno talks about a particularly scary fraud scam that happened not too long ago. Check it out in the video below:
Tl;dr: Deepfakes are like social engineering on steroids, and vendor managers need to be more alert than ever.
Angela describes a scenario in which an organization ended up paying out $25 million to fraudsters. How? The AP person got an email from the CFO asking to wire three different wires. That felt weird to the AP person, so the CFO suggested they hop on a Zoom call, which he did.
Too bad he was the only real person on that call. Everyone else was a deepfake version of people he knew, including the CFO. Yikes!
Here’s the thing: It seemed feasible enough to him that the CFO would ask for such a thing that he went ahead and sent the money. The throughline to all of these instances of fraud is that the corporate culture supports a laissez-faire attitude to vendor change management and vendor onboarding. The vendor management tip here is to address that culture problem to keep your organization airtight from sneaky fraud scams.
Action Items
- Strengthen your company culture around vendor management: A lax culture can create vulnerabilities that fraudsters exploit. Establish strict protocols for vendor change management and onboarding to reduce risks and prevent these sneaky scams from slipping through.
- Stay alert to deepfake risks: Deepfakes have taken social engineering to a new level. Ensure employees are trained to recognize unusual requests, even if they seem to come from familiar sources. Consider implementing additional verification steps for high-stakes transactions, like requiring in-person or multi-factor confirmation.
Takeaway #6 (2024): Eliminate Compliance Gray Area
Our own Emily Libby Rosenberg sat down with Ben Lao, Head of Procurement, Ryan LLC, to talk about the headaches (and stress) caused by manual processes that aren’t always airtight.
For him, the reality was that there were too many manual processes to feel comfortable that all the compliance boxes were being checked. For example, prior to engaging PaymentWorks, Ryan LLC was managing paper checks for the majority of its roughly 2,000 suppliers. This required the requestor who wanted to work with the supplier to do the validation—adding a time-consuming activity to their already-full plate. Not to mention, all the validation was manual.
So even upon validating the information that’s in the PDF, what safeguards were in place that the PDF wasn’t being edited or altered before it gets put into the system for approval? For Ben, there was too much compliance gray area tied to manual processes that made it impossible to feel audit-ready and compliant.
The fix? Switching to an automated system with built-in checks and safeguards for vendor onboarding and management. That means audit trails, approval trails, and the peace of mind that comes with knowing all the compliance boxes are checked. Watch the full clip below:
Action Items
- Automate vendor validation to reduce compliance risks: Manual processes, like managing paper checks and PDF validations, can leave compliance gaps that fraudsters exploit. Automating vendor onboarding with built-in checks and safeguards provides clear audit trails and ensures all compliance requirements are met.
- Streamline workflows for efficiency and accuracy: Relying on requestors to manually validate supplier information adds unnecessary workload and increases the risk of human error. Implementing an automated vendor management system enables organizations to ensure consistent, reliable processes that save time and improve compliance.
Vendor Management Tips Are Just a Beginning
In conclusion, effective vendor management is crucial for organizations looking to streamline operations, reduce risks, and build stronger partnerships with their suppliers. Hopefully, these six vendor management tips provide a solid launchpad for vendor management improvements within your organization. While acknowledging problem areas and weak spots can be a good first step, be sure you’re not putting a bandaid on a bullet wound.
In other words, there are some cases where vendor management needs to be reimagined from the bottom up. For example, vendor onboarding and management that is heavily reliant on manual processes may never be able to fully plug the holes that fraudsters target.
The six tips shared throughout our events over the past two years highlight key strategies to improve vendor relationships, from thorough vetting processes and preventing fraud to fostering clear communication channels and improving risk management. As the vendor landscape grows more complex, these best practices provide a foundation for success.
A recurring theme throughout our discussions has been the growing importance of automation in vendor management. Automating tasks—such as vendor onboarding, bank account verification, and compliance checks—allows organizations to reduce manual errors, save time, and focus on strategic activities. Automation not only improves efficiency but also enhances transparency, providing real-time insights and enabling quicker decision-making. Embracing gives organizations more control over their vendor relationships, helping to optimize costs and adapt to the evolving needs of their business. As we look to the future, leveraging automation will be a key differentiator for those aiming to stay competitive.
Get Ready for Vendor Management Day 2024
You know what’s really spooky? Missing out on the second annual Vendor Management Appreciation Day (VMAD)! Will you join us?
Why? Because there’s no expiration date on honoring one of the most important, under-recognized roles across industries: vendor management.
Join us in observing Vendor Management Appreciation Day (VMAD)! We’re gearing up for the 2024 celebration, and we want you to be a part of it!
VMAD is a new holiday geared toward unifying vendor management professionals and celebrating innovation in the field.
Moreover, we’ve released gifts each month to help you supercharge your vendor management efforts. Additionally, we’re planning some awesome events so everyone can connect and celebrate the important, strategic role of vendor management.
In the meantime, learn more here, and grab some free vendor management goodies.
Want Help Aligning Teams On These Vendor Management Tips?
We have your back. Below are several resources with plenty of additional best practices and tips to help you improve your vendor management processes.
Why a Weak Vendor Identification Process at Onboarding Makes You Vulnerable to Fraud
Vendor Verification: How NOT to Do it and What to Do Instead
The New Face of Vendor Fraud Cases
Interested in More Vendor Management Tips?
Want Personalized Guidance on Implementing These Vendor Management Tips?
