5 Ways to Strengthen Your Vendor Relationships for Growth
Your accounting team works with vendors every day. They’re part of what makes your business a success, after all, and they’ll likely play an even larger role as your company grows. That’s why putting time and effort into strengthening your supplier relationships can be considered an investment in your future. Here are 5 ways to ensure you’re building foundations for long-term vendor partnerships.
- Maintain an Easy Flow of 2-Way Communication
One thing both personal and professional relationships share in common is a need for effective communication. It’s essential for championing the good times and weathering the rough times—assuming, of course, that both parties are committed to a longstanding partnership.
Encourage your supplier relationships managers to schedule regular check-ins with key vendors, even if they touch base over the phone or e-mail just a few times a year. An annual in-person facility visit may be ideal for connecting face-to-face. Either way, keeping an open channel of communication between individuals encourages easy access and collaboration for ongoing problem-solving, providing feedback, and sharing new ideas or opportunities.
- Set Expectations from the Start
Consider the many ways your priorities may differ from your vendors’. For example, your idea of “on time” might be within a week of the deadline, while your vendor prefers precision. It’s easy to take expectations for granted because they’re engrained in our company or departmental culture—or because we’re used to operating within a particular industry with stricter (or looser) norms.
That’s why it’s important to be clear about your needs with respect to timeliness, quality, pricing, communication, customer service, and more, and to get them written into your contracts. But also listen to your vendors and find out what they need from you. It’s helpful to understand your suppliers’ business, or at least of the challenges they face, to give you perspective on their strengths and weaknesses.
- Plan for the “What Ifs”
Contingencies are always a good idea. What do you do if an important shipment arrives late? What if an order is incorrect or damaged? What if you’re billed incorrectly? The list of potential vendor challenges is almost endless. You and your vendors should be on the same page with exceptions handling. Work out a plan ahead of time so both parties know what should happen in the case of a problem. And don’t get caught of guard by a job well done? Be ready with a show of appreciation.
- Explore (and Take Advantage of) “Perks”
Successful supplier partnerships always require some negotiation—and the happiest partnerships work for a win-win. With growth on the horizon, it’s critical to derive the utmost value from your suppliers. As the customer, you have to be sure you’re getting competitive prices as well as competitive services. You have the bargaining power—and your goal is to find the right balance of give-and-take so each party’s needs are met as the relationship expands.
In setting yourself up for a mutually beneficial arrangement, think, “what’s in it for you, and what’s in it for me?” Provide projections if you think you’ll have more business for the vendor in the coming months, offer to make bigger deposits on your orders, or be flexible with your payment terms. Then see what the vendor can offer in exchange, such as bulk purchase discounts, early payment discounts, more comprehensive warranties, or other perks that apply to your cash flow or service needs.
- Leverage Technology for Success
Deloitte points out that a common risk for accounts payables is to “rely too heavily on error-prone manual processes to approve requisitions, scan supplier invoices and issue payments,” especially if your company wants to ensure effective and timely transactions and take advantage of more favorable payment terms ore discounts. Manual processes also tend to lead to inefficient use of time and staff resources, which impacts the service your department is able to provide to both vendors and company decision-makers.
Modern finance and accounting software is designed to automate—and streamlines your process will help eliminate these risks. Implementing a state-of-the-art system can result in better supplier relations via:
- Better visibility into how much and how often you pay suppliers. These insights can aid in selecting vendors and managing cash flow.
- Streamlined processes, including purchasing and payment approval. At the same time, you can “go paperless” and automate (and speed up) vendor payments and reconciliations.
- Digital records, which are easy to access and help raise standards related to data quality, timeliness, and payment process flows.