by Angela Sarno

VP Marketing

Who Cares About Vendor Management? The Treasury Function We Don’t Discuss

If it’s not obvious from the title, treasury departments, I am looking at you. Today, we’re going to discuss a treasury function that is rarely discussed or upheld. Yet, this treasury function can have a significant impact on an organization’s profitability.

Last spring I had the distinct pleasure of not only attending but presenting at both The Payments Academy and the Windy City Summit. Both conferences attracted treasury professionals from around the country.

At PaymentWorks, our customers and prospects are generally in A/P and Procurement. This was my first experience spending extensive time with those who live in the world of treasury.

Always looking to learn, I took advantage of my time at these conferences to pepper many of the attendees with questions about their jobs.

I wanted to learn what excited them at work and to understand and how they defined success.

Being a vendor management nerd, I also asked how many of them had anything to do with vendor onboarding and change management.

Below are several insights I gleaned from those conversations.

Organizational Silos: Vendor Management Not Viewed as a Treasury Function

How to Make Vendor Management Partly a Treasury Function

The Risk Inherent in Your Vendor Onboarding Process That a Treasury Function Can (and Should) Help Mitigate

Vendor Management is the Foundation of Your Organization’s Financial Health

What Treasury Teams Can Do Today to Support Vendor Management

Blogs for Aligning Vendor Management and Treasury Teams

Want Regular Vendor Management Tips?

Want Personalized Guidance on Your Vendor Management Strategy?

Organizational Silos: Vendor Management Not Viewed as a Treasury Function

First, many of the treasury professionals I spoke with had “It’s Not My Problem” Syndrome when it came to vendor management.

However, I did learn about what excites treasury professionals about their jobs.

They’re excited about having an impact on the function, knowing exactly how much cash on hand would be needed and measuring the success of the improvements they implement on how their business operates.

When I asked the treasury professionals what doing a good job looks like for them, the answer was resounding. Success looks like getting things done on time. This was the verbatim answer from almost every single person I asked, “getting it done on time.”

My questions about vendor management, however, were greeted with a giant collective shrug.

Almost none of these professionals considered this a treasury function, aka a responsibility to be something that treasury needed to be involved with.

In fact, and I am quoting here, more than once someone said “that is not my problem.”

Is vendor management not typically recognized as a part of the treasury function?

If we look at the data, the answer is not necessarily.

On a wide scale, it seems that treasury teams do care about processes–risk management, streamlined payment processes–that fall under the vendor management umbrella.

In the 2022 Association of Financial Professionals “Strategic Role of Treasury Survey,” one of the most challenging issues facing treasury was improving payment processes. (64% of respondents.)
Additionally, 42% reported that ‘protecting the organization through sound internal policies and procedures for money movement’ was another top challenge.
Finally, the same survey reports that 67% of treasury organizations support enterprise risk management, and 51% support supply chain management.

To sum up, I ask, how can where those payments end up not be a treasury “problem”?

The data within your supplier file is relied upon by your entire organization every day. Procurement, risk, finance, business departments, treasury…decisions are made, deals are struck and risk is assessed—or not—based on what has been input into your financial system.

But no one, save for the poor soul in charge of it, seems to actually care how that data gets into the ERP in the first place.

It could be inaccurate, outdated, not compliant, or a fraudster.

This needs to be everyone’s problem.

How to Make Vendor Management Partly a Treasury Function

Luckily for you, we made it VERY easy for inaccurate, outdated, or fraudulent data to be everyone’s problem.

In fact, we made a whole podcast about it. Our recent episode of Risky Business is an interview with an anonymous vendor desk manager. She describes in-depth what it’s like to be the only one in an organization to pay attention to how data gets into the ERP.

The Risk Inherent in Your Vendor Onboarding Process That a Treasury Function Can (and Should) Help Mitigate

I had the honor of co-presenting at Windy City on the topic of risk and vendor onboarding with Chris Arehart, SVP of Chubb, our insurance partner.

I work at a company that stops vendor impersonation and social engineering frauds. Chris works for a company that helps in the aftermath from successful frauds of these types.

As such, we’ve seen a lot and have a combined expertise in why these scams are so pervasive, and what organizations can do to avoid falling victim to a fraudster.

Independently, we’ve reached the same conclusion. Mainly, there isn’t enough respect, investment or care put into the vendor onboarding and management process. The prevailing perception is that vendor management = data entry.

Our presentation laid out why the treasury team (and frankly, everyone at your organization) should care about vendor management as a strategic gateway to better business and not, as it usually is, as a clerical function.

Additionally, Chris was honest about the lack of importance vendor management is given in many organizations.

He said, “We’ve seen a thousand plus claims of social engineering fraud. We’re the largest writer of fidelity and crime insurance in North America. So we see it all. And unfortunately, most clients report that they don’t have their process written down, because they don’t write down clerical processes. And I’m here to tell you, this is not a clerical job.”

Vendor Management is the Foundation of Your Organization’s Financial Health

Think about these questions. First, do you want better business outcomes? Second, are you looking for a guarantee of meeting your goals of cash on hand and getting stuff done on time?

Then, you simply must start at the beginning. How secure are you in your organization’s foundational payment process? Think about your current process of gathering, vetting and inputting vendor payment data.

Think about what is at stake, and what you are asking of folks in vendor management roles. Would you trust an undocumented process with a low-wage, unskilled employee with a million dollars at stake? With five million?

This happens daily. It might be happening right now at your organization.

The great Debra Richardson (and keynote at our upcoming in-person event!) provides a clear and impactful description of this matter:

“Ok, Uncle!” you say. “I’m ready to care. But what exactly does that mean?”

It means understanding, investing in, and documenting the blueprint for your new foundation.

What Treasury Teams Can Do Today to Support Vendor Management

We recently announced the invention of my new favorite holiday: Vendor Management Appreciation Day on December 12.

As part of this six-month celebration, we’re giving away a ton of free gifts. The perfect gift for treasury teams is a tool you can use to begin the process of changing the paradigm around vendor management at your organization.

Yes, you can use this resource to make the treasury function of supporting vendor management extremely clear to your team.

Write it Down: A Template for Documenting Procedures for Supplier Onboarding and Change Management.

The Write it Down template is meant to be the push your organization might need to get all invested stakeholders on the same page about making some serious changes to your vendor management process.

To sum up, reviewing your current process and documenting it will serve to invest your organization in the value of this work.