The Hidden Costs of Manual Vendor Onboarding in Higher Education
It's more expensive than you think
by Ashley Poynter
Content Manager
PaymentWorksThe Hidden Costs of Manual Vendor Onboarding in Higher Education
Vendor relationships are the unsung heroes keeping institutions running smoothly, but what are the costs of manual vendor onboarding in higher education? Vendors play a pivotal role, whether they’re supplying lab equipment or providing campus services. But here’s the kicker: many colleges and universities still rely on manual processes to onboard these essential partners. It’s like using a flip phone in the smartphone era—charming, perhaps, but far from efficient.
Manual vendor onboarding may seem like a minor inconvenience, but beneath the surface, it creates a ripple effect of inefficiencies, financial waste, compliance risks, and operational slowdowns. In this article, we’ll unpack these hidden costs and explore why higher education institutions (HEIs) should rethink their approach.
Table of Contents
Understanding the real cost of manual vendor onboarding in higher education
— 1. Administrative burden and inefficiency
— 2. Financial costs and revenue leakage
— 3. Compliance risks and institutional liability
— 4. Slower procurement and operational delays
The Case for Replacing Manual Vendor Onboarding in Higher Education With Automation
From Manual Vendor Onboarding in Higher Education to Smarter Vendor Management
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Understanding the Real Cost of Manual Vendor Onboarding in Higher Education
Before diving into the details, let’s take a step back and look at the big picture. What does manual vendor onboarding truly cost higher education institutions? The answer: far more than most realize.
- Wasted Time & Administrative Burden – Manually collecting, verifying, and entering vendor information is slow, error-prone, and resource-intensive. Staff spend hours chasing paperwork, sending follow-up emails, and manually tracking compliance documents, pulling them away from more strategic work.
- Higher Labor Costs – Because manual onboarding is so time-consuming, institutions either overburden existing staff or hire additional personnel to manage the workload.
- Lost Cost-Saving Opportunities – Slow vendor onboarding prevents institutions from leveraging early payment discounts, optimizing vendor negotiations, and streamlining procurement.
- Delayed Payments & Late Fees – Payment cycles slow down when onboarding lags, increasing the likelihood of late fees and creating friction with vendors.
- Increased Compliance Risks – Manual processes increase the chance of missing documentation, leading to audit issues, regulatory non-compliance, and potential penalties.
- Data Security & Privacy Concerns – Sensitive vendor information, when handled manually, is more susceptible to breaches and mismanagement.
- Reputation Damage – Vendor-related compliance failures and procurement inefficiencies can hurt an institution’s credibility, potentially impacting funding and stakeholder trust.
- Procurement & Operational Delays – A slow onboarding process creates bottlenecks in acquiring essential goods and services, affecting everything from IT infrastructure to research projects.
These costs go beyond just inefficiencies—they actively hinder an institution’s ability to operate smoothly and manage vendors effectively. Now, let’s take a closer look at each of these challenges.
1. Administrative burden and inefficiency
Manual vendor onboarding in higher education institutions puts an addition squeeze on tight budgets and even tighter schedules. Yet, many still rely on these outdated processes, which creates unnecessary administrative headaches. Instead of focusing on strategic initiatives, procurement teams find themselves buried in paperwork, endless emails, and time-consuming follow-ups. This inefficiency isn’t just frustrating—it’s costly.
Time-intensive processes
Collecting, verifying, and entering vendor information by hand is a slow dance prone to missteps. Staff juggle piles of paperwork, endless email threads, and constant follow-ups, turning what should be a straightforward task into a marathon. This manual slog not only eats up time but also increases the chance of errors.
Impact on staff productivity
When administrative teams are bogged down with repetitive, low-value tasks, their capacity for strategic initiatives takes a hit. Instead of focusing on improving procurement strategies or fostering vendor relationships, they’re stuck in a loop of data entry and chasing missing information. This not only leads to frustration but also hampers overall efficiency.
Compliance and documentation challenges
Manual processes are a breeding ground for compliance issues. Missing or misplaced documents like tax forms, contracts, or certifications can lead to significant headaches during audits.
2. Financial costs and revenue leakage
Beyond wasted time, manual vendor onboarding also takes a serious toll on an institution’s finances. Increased labor costs, delayed payments, and missed cost-saving opportunities all add up, straining already limited budgets. These inefficiencies don’t just cost money—they prevent institutions from optimizing their financial resources.
Higher labor costs
The more manual the process, the more personnel hours are required to manage vendor intake. This often means hiring additional staff or paying for overtime, leading to increased labor costs. It’s like paying premium prices for dial-up internet—unnecessary and outdated.
Delayed vendor payments and late fees
Slow onboarding processes can delay purchase orders and payment cycles, resulting in late fees and strained relationships with key vendors. Timely payments are crucial for maintaining trust and securing favorable terms.
Manual vendor onboarding in higher education means lost opportunities for cost savings
Manual processing limits the ability to leverage early payment discounts and hinders streamlined vendor negotiations. The longer it takes to onboard a vendor, the less agile an institution becomes in seizing cost-saving opportunities.
3. Compliance risks and institutional liability
Higher education institutions are held to strict compliance standards, and manual onboarding increases the risk of errors that can lead to costly penalties. From data security concerns to regulatory non-compliance, the risks associated with outdated processes can have long-term consequences.
Failure to meet regulatory requirements
Higher education institutions must adhere to a labyrinth of federal, state, and institutional procurement rules. Manual errors in vendor verification can lead to non-compliance penalties, putting the institution at financial and reputational risk.
Data security and privacy concerns
Handling sensitive vendor data manually increases the risk of data breaches. Poor tracking of vendor compliance records can lead to potential legal disputes, further endangering the institution’s standing.
Reputational risks
Vendor-related compliance failures can tarnish an institution’s credibility. Publicized procurement issues can impact funding and erode trust from stakeholders, including students, parents, and donors.
4. Slower procurement and operational delays
Procurement in higher education is already a complex process, and manual vendor onboarding only makes it worse. Slow approvals, misplaced paperwork, and inefficient tracking create bottlenecks that delay the delivery of crucial supplies, technology, and services.
Bottlenecks in supply chain and service delivery
Manual onboarding delays impact the timely acquisition of essential goods and services. Departments like IT, facilities, and research experience disruptions due to slow vendor approval, hindering their operations. Dan Alden, Director of Procurement at Texas State University, describes his experience prior to implementing automation:
“Everything was being handled with paper forms. Everything was human intervention. […] We were doing what we could to try to confirm [payee identity] data, but we were very limited. We would ask for notarized documents, we would ask for copies of checks, we would ask for copies of IDs… We were really a bottleneck for the university because of that manual process and because of those security processes.”
Impact on faculty and student experience
Delayed vendor onboarding can affect research grants, classroom technology, and campus services. Slower procurement of learning materials and infrastructure negatively impacts the student experience, which is central to an institution’s mission. As Valarie Van Vlack, treasurer at Texas State University, points out:
“Researchers really want to focus on their mission, not processing paperwork or waiting for the vendor to be paid…they’re waiting for an instrument or some kind of research to be done. And the payment needs to be done that day…and our university mission…is to support the rest of the university.”
Lack of visibility into vendor performance
Without automated systems, tracking vendor performance and contracts is inefficient. Institutions struggle with decision-making due to fragmented vendor records, leading to suboptimal vendor management.
5. Fat-finger mistakes and fraud risks
Higher education institutions handle massive amounts of payments, making them attractive targets for fraud. Vendor fraud schemes—such as invoice fraud, payment diversion, and fake vendor accounts—become significantly easier to execute in an environment where vendor data is managed manually. Without proper safeguards, institutions leave themselves vulnerable to costly fraud incidents that could have been prevented.
Invoice Fraud and Payment Diversion
Without automated invoice matching and validation, institutions are more susceptible to invoice fraud. Bad actors can submit duplicate invoices, inflate payment amounts, or change payment details to reroute funds to fraudulent accounts.
Lack of audit trails and oversight
When vendor records are managed through paper files or spreadsheets, tracking changes and identifying suspicious activity becomes nearly impossible. Fraudulent activity can go undetected for months or even years, especially in institutions with decentralized procurement processes. Some regulatory bodies even require reporting on these attempts, which can highlight the gravity of the problem, as Valarie Van Vlack points out:
“We have a requirement called ‘red flags’…where any fraud attempts need to be reported to the CFO or your administrator of the program, and they need to discuss that with their board. So annually, we create a report of any entity that an imposter tried to enter to try to give us information, and it didn’t seem right…My reports are very short for a lot of other business units on campus, but IT is 600 to 700 lines of just phishing attempts and students taking the phishing attempts.”
How automation helps prevent fraud
Automated vendor onboarding systems provide built-in fraud detection tools, such as:
- Identity Verification – Ensuring vendors are legitimate before they are onboarded.
- Bank Account Authentication – Verifying banking details to prevent payment diversion fraud.
- Audit Trails and Access Controls – Tracking changes to vendor records and restricting access to sensitive financial data.
In short, automation makes it much harder for fraudsters to exploit vendor onboarding weaknesses, protecting both institutional funds and reputations.
The Case for Replacing Manual Vendor Onboarding in Higher Education With Automation
The good news? There’s a better way. Automation eliminates the headaches associated with manual onboarding, reducing administrative burdens, improving efficiency, and saving institutions money.
How automation improves efficiency
Automation reduces administrative burdens with self-service vendor portals, speeding up verification, approval, and documentation tracking. This streamlining allows staff to focus on strategic tasks rather than mundane data entry. Renee Starns, Executive Director of Procurement & Business at Sam Houston State University, describes it best:
“It was not uncommon to walk into a department and [see that] people had W9s lying on their desks. As fraudulent activities increased in the higher ed industry, we recognized that we had a problem not only there, but also in our abilities to validate the information that was being submitted by the suppliers. We were very heavily paper-based, […] and we were looking for a way to… get everything automated and off paper.”
Cost savings and ROI of digital solutions
Implementing digital solutions reduces manual labor and improves procurement efficiency. It also mitigates compliance risks and ensures audit readiness, offering a solid return on investment.
Faster onboarding improves vendor satisfaction and partnerships. Access to real-time data allows better decision-making for cost control and strengthens vendor relationships.
From Manual Vendor Onboarding in Higher Education to Smarter Vendor Management
The hidden costs of manual vendor onboarding in higher education are substantial, affecting efficiency, finances, compliance, and overall institutional effectiveness. Embracing automation alleviates these inefficiencies, reduces financial waste, and enhances compliance. It’s time for institutions to assess their current onboarding processes and consider modernization.
After all, in an era where even our coffee makers are smart, shouldn’t our vendor onboarding be too?
Get Ready For Vendor Management Appreciation 2025
The Vendor Management Appreciation Day (#VMAD) celebration continues in 2025! And you should 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 2025 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.
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