What Your Vendor Manager Salary Says About Your Organization

What Your Vendor Manager Salary Says About Your Organization

What vendor manager salary are you paying the folks who handle all things vendor onboarding and change management? More importantly, is it reflective of their full scope of responsibilities?

Let me offer some background for these questions. 

We recently discussed the evolution of the vendor manager role on our Risky Business podcast. See, a lot has changed over the past ten years. Actually, it’s changed a lot in the past five years, two years… heck, 365 days. 

Technology and automation have now made it easier for vendor managers to transition from clerical paper pushers (you know, focusing on checking all the boxes) to strategic value creators. However, it’s not clear most organizations are evolving to meet this new reality.

In the past, vendor managers were driven largely by the need to keep things compliant and ensure the right vendors were getting paid the right amount at the right time. That’s three boxes to check right there. 

Today, vendor managers are responsible for managing end-to-end supplier relationships. This means all the policies and workflows that make it possible to do it compliantly and with an eye toward driving efficiency and business value. 

We’ve witnessed the evolution of the vendor manager position, which has gone from a strictly clerical role to a strategic role. But what about the vendor manager’s salary? Has that evolved, too? And what does the vendor manager salary that your organization pays say about your state of vendor management?

Ready for some soul-searching?

What Does a Vendor Manager Do?

Clerical-focused

Great question. While it’s true the answer varies by organization, usually a vendor manager is responsible for (sidebar: these were pulled from a real job listing for “vendor manager” on a job site): 

• Conduct thorough vendor screenings, including background checks and reference verifications
• Collaborate with internal teams to define vendor requirements, campaign objectives, and performance metrics
• Develop and implement vendor onboarding processes, including training and orientation sessions
• Provide ongoing support and guidance to vendors, addressing any questions, concerns, or issues that may arise
• Coordinate and facilitate communication between internal stakeholders  and vendors, ensuring timely and accurate information flow
• Collaborate with cross-functional teams to optimize vendor performance, resolve operational challenges, and implement process improvements
• Track and maintain vendor-related documentation, contracts, and records

In this case, what vendor manager salary is appropriate? According to this posting, it starts at $60k/year, which is honestly in the higher range of what we see for clerical-focused roles. 

At first glance, many of these tasks are about checking boxes. You’ll earn that vendor manager salary by doing screenings, verifications, answering questions, ensuring compliance, coordinating, documenting, and record-tracking. 

Some might say the vendor manager is tasked with protecting the organization’s “gold” (e.g., vendor payments and remittance info). Think that’s going too far? What about the vendor managers whose quick thinking helps protect their organization from a multimillion-dollar fraud?

Yet so many vendor manager salary postings are at par with or lower than what a fast-food employee makes, as Debra Richardson, MBA, CFE, APM, APPM, CPRS, points out below: 

But things are changing. 

Analyst-focused

Let’s take a look at another listing for a vendor management specialist and the listed responsibilities: 

• As a Vendor Management Specialist, you play a vital role in procuring top-quality products and services from vendors
• You will be actively involved in all aspects of vendor management, from pre-screening and qualification procedures to negotiating favorable terms and prices
• Your responsibilities encompass onboarding, contract processing, invoice management, conflict resolution, and the implementation of high-level vendor management strategies and policies
• Develop, implement, and maintain quality assurance protocols to ensure the highest standards are met
• Enhance organizational processes and procedures to optimize internal capacity and efficiency
• Actively pursue strategic and operational objectives to drive business success
• Support Strategic Improvements by gathering feedback from various departments and vendors to refine strategies and enhance value
• Drive continuous improvements and efficiencies based on data analysis
• Maintain detailed logs of vendor activities and conduct regular audits to ensure adherence to standard operating procedures
• Ensure operational activities remain on schedule and within budget constraints

The vendor manager salary for this one? Salary: $100,000-$125,000 + 10% annual bonus. 

There are no qualms about the importance of finding someone with an analytical and strategic brain. And there are no qualms about paying them a vendor manager salary that matches the high-level asks of the role. In 2024, this is what your vendor manager should be doing with his/her/their time.)

Is Your Vendor Manager Salary Admin- or Analyst-Focused?

I won’t mince words: you should be focused on making the vendor manager position a strategic one. Technology and automation can handle the bulk of clerical tasks that vendor managers once had to handle manually. Of course, there will still be some tactical measures and due diligence that vendor managers still perform or oversee. 

Even so, there’s been a sweeping transition toward strategic optimization in vendor management. Firstly, organizations want to optimize the ecosystem of vendors they work with. Secondly, they want to iteratively improve vendor onboarding and management to enhance value for their business. Finally, they want to analyze data to make the organization more efficient. 

Subsequently, your vendor manager salary has to evolve into a more appropriate offering as well. 

What you should be asking

Despite this evolution, many organizations are stuck in the past,. Ask these questions to spur change: 

• Is “box-checking” prioritized or are we leveraging the full skill set of our vendor managers? If the latter, how does the reliance on manual tasks add to our risk and costs? (Need some help figuring this out? We put together a workbook to help you figure this out)
• Are we tied to dated vendor management practices and policies? Do we not even have documented policies and procedures? (More help! We have a template for that, too)
• Is the culture such that the C-suite and other top-level managers bypass/break our vendor manager’s policies/workflows? Is that putting the organization at risk? (: You guessed it. We have another template for that here).
• Do we have a “clean” vendor master file? Does your organization trust that the data is accurate and up-to-date? If not, how much is that costing us in unnecessary manual labor and in the missed opportunity to use data to increase efficiency?

I bet if you run the numbers, you have more than enough data to justify a higher vendor manager skill set, and the salary to match. 

In sum, it’s time for organizations to get with the program. Vendor managers are the new quarterbacks, and an organization’s vendor manager salary should reflect this. The days of paper pushing are over. In truth, these folks orchestrate every aspect and guide the policy behind vendor onboarding and management. Tom Rogers, the CEO of Vendor Centric, puts it nicely: 

Your Vendor Manager Salary Should Account for the Breadth of Responsibilities

To better understand what the appropriate vendor manager salary looks like, let’s dive even deeper into everything vendor management specialists handle. 

Vendor onboarding

Vendor onboarding is where the magic (or disaster) happens. Things that get screwed up during the vendor onboarding process have downstream consequences that can ding your bottom line and cost your organization money for years. (Yes, years!) But the opposite is true, too. 

For example, let’s look at electronic payments like ACH and virtual cards. What if you had a way to automatically enroll new vendors into a virtual card program at the time of onboarding? No more costly switch campaigns through the bank (do those even work?). Easy virtual rebate revenue that starts from Day One and continues ad infinitum (or until you’re done working with that vendor). 

But try asking an admin-focused vendor manager to squeeze that into their already jam-packed day of vendor onboarding activities: 

• Vendor bank account verification – manually sourcing and entering vendor information via voided checks, account info on bank letterhead, and confirmation calls (fraudsters love all this, btw)
• Compliance and security — verifying tax IDs, contact information, and addresses; running through sanctions and debarment lists
• Approval workflows and audit trails — managing multi-level approval processes run on spreadsheets and disparate email chains
• Vendor updates — manually updating vendor details via phone calls and emails (risky and time-consuming!) and ensuring the master file is updated (or just acquiescing to the fact that it’s going to have duplicate records…::sigh::)

In other words, it’s really, really hard to execute a payments strategy when your team is underwater with manual tasks.

Vendor compliance

Compliance is one area in which many organizations spend too much time and do too much manual labor (Unless, of course, they are ignoring it and hoping that it doesn’t come back to haunt anyone!). Most of these checks and tasks can be automated, freeing up your vendor manager to ensure the boxes are checked (rather than completing the steps and checking the boxes themselves). 

That is to say, the additional free time can be rededicated to value-added tasks. Moreover, automating the following can significantly reduce human error and close the door to fraud: 

• Global: compliance you are subjected to by the countries or jurisdictions where your vendor is located
  • making sure to collect the right tax numbers for all countries
  • tracking adherence to everything
• Federal: US vendor compliance rules that apply to all US-based companies
  • examing and adhering to industry-specific regulations
  • checking OFAC, sam.gov, and other sanctions/debarment lists
  • monitoring adherence to everything
• State: vendor compliance rules specific to your state of operation or based on where the work is performed.
  • confirming if vendors require separate 1099 reporting
  • checking if there are vendors that perform services that require additional/separate onboarding forms
  • following state regulations on data privacy
  • checking against state watchlists
  • monitoring adherence to everything
• Internal: vendor compliance specific to your organization
  • tracking where sensitive vendor data lives
  • creating and adhering to processes that prevent fraud, IRS or other federal fines, and bad data
  • managing access control for sensitive data
  • managing conflicts of interest and policy
  • tracking adherence to everything
• Partnering with the risk management team, tax team, and sponsored funds/grant team

P.S. If your organization is still ironing all this out, check out our helpful template here. 

Vendor risk management

Risk management is the vendor manager’s middle name. As such, nearly everything they touch relates to the mission of keeping the organization secure: 

• Verify the vendor is real — are they who they say they are? To clarify, this means running through all kinds of documentation and third-party data checks to verify submitted information against references and data sources
• Confirm vendor information is correct — asking for and checking against all kinds of vendor information: 
  • Name, address, DBA
  • Tax ID
  • Bank account info
• Collect and verify COIs — make sure vendors have and submit any certificates of insurance (COIs)
• Verify supplier diversity requirements and HUB documents — analyze adherence to supplier diversity commitments and goals and necessary HUB verification
• Collect and vet conflict of interest statements – ensure the organizational policies are being enforced
• Audit trails and communication — in addition to collecting the right documents, vendor managers need to track how information is recorded, tracked, and routed throughout the organization; additionally, they also make sure the appropriate information gets to the right departments (tax, compliance, treasury, risk), and that sensitive vendor data is protected throughout the vendor lifecycle

Payment optimization

Payment optimization might be the most important strategic area for vendor managers, yet it’s the one that often gets the least attention. Why? Because most vendor managers have their hands full with manual tasks and box-checking. In other words, there’s no time to add value under those conditions. However, when automation lends a hand, vendor managers can focus on value creation. Here are some of the responsibilities for payment optimization: 

• Managing payment — automation reduces labor and costs associated with the paper check method, instead allowing organizations to seamlessly pay vendors via electronic (ideally, virtual card) payments. 
• Convert vendors to electronic payment types — using an automated platform makes it easy to marry virtual card onboarding and vendor onboarding to easily convert vendors to electronic payment types without disruptive, ineffective bank calling campaigns. 
• Reporting — automation makes reporting super simple and highly insightful, especially with an automated platform that can gather data from electronic payments to help you understand the effectiveness of your payment strategy. 
• Optimize rebate revenue — marrying virtual card and vendor onboarding makes it easy to collect rebate revenue from the first invoice sent, optimizing payments and potentially turning it into a profit center.
• Adjust payment strategy — automated platforms often provide dashboard analytics, making it extremely simple to monitor and adjust the payment strategy

When you take all this in, it makes sense that many organizations view the vendor manager salary as a six-figure salary. 

So, what’s it going to be? Status quo or up-level to value creation and delivery (And pay appropriately!!!)?

Get Ready For Vendor Management Appreciation Day

Know what else is pretty popular? Vendor Management Appreciation Day (VMAD)! And the party continues all year long — join us! 

Why? Because there’s no expiration date on honoring one of the most important, under-recognized roles across industries: vendor management.

VMAD is a unique holiday geared toward unifying vendor management professionals and celebrating innovation in the field.

We’ve been releasing gifts each month to help you supercharge your vendor management efforts. We’re also planning some awesome events so everyone can connect and celebrate the important, strategic role of vendor management.

Learn more here, and grab some free vendor management goodies.

Want Help Aligning Teams On The Right Vendor Manager Salary?

Explore our blogs below. They’re filled with action items you can implement right away.

Risky Business With PaymentWorks: E14–Top Trends in Vendor Management

Growing Your Virtual Card Payment Program

5 Ways Your Supplier Master Data is Costing You Money- Compliance Edition

Vendor Verification: How NOT to Do it and What to Do Instead

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