Vendor management or Supplier Management is crucial for businesses looking to scale or upgrade their operations even as the global supply chain faces challenges. It also ensures that your relationships with the vendors are transparent and that you build long-term strategic partnerships that benefit all parties. Continue reading to understand the meaning of supplier management or vendor management systems, processes, and tools.What is the Vendor Management Process? Vendor management or supplier management is managing and communicating with suppliers (vendors) to prevent third-party disruptions. It includes the following activities: Selecting vendorsOnboarding vendorsNegotiating contractsTraining them to use your platformControlling costsReducing vendor-related risksEnsuring deliveryEvaluating performanceThese activities ensure suppliers or vendors work perfectly and in tandem with your organisational goals. Unlike most business processes, vendor management can’t occur in silos. It is a coordinated effort between the following operational areas: Procurement managementContract managementThird-party risk management Importance of Vendor Management Vendor management or supplier management ensures distribution-free business processes, but to what extent? Let’s find out: It improves the communication and coordination between a firm and its vendors. This could improve vendor service quality, better pricing, and timely delivery. It also ensures that your vendors meet your quality, safety, and legal requirements standards. A robust vendor management system would monitor the risk involved in vendor management and help you mitigate any risks. It can also help you optimise the costs and benefits of working with vendors by helping you negotiate better manage payments and early payment discounts.Why do businesses need an effective vendor management process? An effective vendor management process or supplier management process helps you stay on the path.

When the purchase invoices reach the buyer company, it is almost never a one-step process to get them ready for payment. Often, invoice approval is seen as a complex series of actions that could happen over days, weeks, or even months.Meaning of Invoice Approval Workflow and Its ImportanceAn invoice approval workflow refers to a series of steps that an organisation follows for clearing the vendor invoice. An invoice approval workflow acts as a checklist to ensure that there are no inconsistencies or mismatches, and that the invoices are paid on time.An invoice approval workflow includes the review and approval of invoices before the payment for the same is processed. Typically, the invoice approval workflow starts when an organisation receives a vendor invoice, it is then checked and reviewed by the purchasing department. After verifying the details of the vendor invoice, it is then sent to the accounting department for further processing and consequent payment. Stages Involved in the Invoice Approval WorkflowWhile the invoice approval workflow could differ from company to company, it generally includes the below-listed steps:Step 1.

Dynamic discounting usually applies to individual invoices where the discount is expressed as a percentage of the face value of that particular invoice. Our Dynamic discounting guide will give you complete details about the concept and its usefulness for you to evaluate it for your business.Meaning of dynamic discountingBusinesses can reduce their costs by taking advantage of dynamic discounting, which involves vendors offering a variable early payment discount to their buyers. The earlier the buyer pays, the higher the discount. The suppliers offer the buyers a choice of invoice payment dates and the calculated discount amount for those dates.Parties in dynamic discounting and eligibilityDynamic discounting essentially contains two main parties, the vendor (supplier) and the buyer (enterprise). Buyers with sufficient cash usually opt for dynamic discounting to improve the financial health of their supply chain.

Developing relationships with a new vendor could be complicated. If an organisation doesn’t have an established vendor onboarding process, it could be risking a damaged vendor relationship from the start. Ensuring that vendor onboarding processes are streamlined helps an organisation get the vendor relationship off to the best possible start.Meaning of Vendor Onboarding and Vendor SourcingVendor sourcing and vendor onboarding are two separate processes that are closely linked and must be followed sequentially.Vendor sourcing or source to contract refers to screening, validating and selecting vendors for procuring the goods and services an organisation needs for its business. On the other hand, vendor onboarding comes right after vendor sourcing and guides an organisation’s new vendors into its network. Vendor Onboarding Process ExplainedFor different organisations, the vendor onboarding process could be entirely different. However, listed below are some standard steps that are always involved.Understanding the VendorsThe vendor onboarding process begins with adding the vendor to the organisation’s database and collecting the necessary documents.

The most common problem that MSMEs encounter is liquidity, often resulting from delayed payments from customers. Bill discounting platforms have emerged as a saviour to combat these liquidity problems.Meaning of bill discountingInvoice discounting is an alternative form of credit for businesses wherein vendors of a corporate buyer offer discounts to the aforementioned in exchange for payment at a date earlier than the maturity date. MSMEs can submit the bills of the customers who intend to settle their bills within 30 to 120 days. Once the seller uploads the invoices onto the platform, the financier applies the discounting rate while the buyer approves the uploaded invoices. At settlement, the seller pays a percentage as the discounting fee to the financier, the financier then transfers the invoice amount to the seller’s account.Benefits of bill discounting for MSMEs in IndiaBetter financial healthThe actual number of MSMEs that receive formal credit is below 20% overall.

A key activity in the accounts payable function of any organisation is the process of invoice matching. Invoice matching is the comparison of data between key documents in the procure-to-pay process. It aids the quick settlements to vendors and mitigates the risk of fraud.What is invoice matchingInvoice matching is the process of comparing the information appearing in the purchase order with the information available on vendor invoices, goods receipt notes, and inspection slips to ensure there are no errors or inconsistencies. In the invoice matching process, key data such as the line items, list price, quantity, tax amounts, and other such details are compared. If any errors or inconsistencies are observed, the payment for such invoice is put on hold until the issue is resolved with the respective vendor. Methods of invoice matchingThere are three methods of invoice matching that enterprises generally follow2-way matching is the most simple one where invoices are matched to purchase order to check for discrepancies3-way matching is quite popular where details in the invoice are checked with the information in purchase order and receipt of goods4-way matching is where invoices are matched with a purchase order, receipt of goods, and inspection slips.

Minimal risk and attractive returns make invoice discounting an ideal option for a company in the short term to diversify its portfolio. This article focuses on India’s rules and regulations governing invoice discounting practices.Is invoice discounting regulated in India?The Reserve Bank of India (RBI) formed a working group on Discounting of Bills by banks in 1999 to examine the possibility of widening the scope of bill discounting and extending the facility even to the services sector, given its traction and growth. Who regulates invoice discounting in India?Apart from a few private players, the Reserve Bank has allowed Receivables Exchange of India, Trade Receivables Discounting System (TReDS) and M1Xchange to operate the online bill discounting platforms under its TReDS initiative. Combined, these platforms have discounted bills amounting to Rs.18,000 crore in the last fiscal year.Who can discount invoices in India?The option to avail of the benefits of invoice discounting is open to all businesses selling goods or services to customers, with the credit period ranging between 30 and 90 days. The following are the key players in invoice discounting:ManufacturersDistributorsBusiness to Business ServicesWhere can one carry out invoice discounting in India?With the eruption of Fintech companies, trading invoices has become as easy as raising a loan. A few e-discounting platforms offer invoice discounting services in India that businesses can opt for to liquidate their invoices or invest in them for good returns with minimal risk.The RBI regulates all these platforms under the Payments and Settlement System (PSS) Act 2007.

Invoice discounting is a short-term financing source that is prominent among businesses globally. It is a useful mechanism for businesses to convert outstanding invoices into liquid cash. One can fund their working capital requirements by discounting outstanding invoices.How does invoice discounting work?Invoice discounting involves selling outstanding invoices to a third party at a discount. Invoices can also be discounted with the buyer, wherein the debtor advances the invoice value at a discount. At the time of maturity of the invoice, the seller or seller’s bank collects the invoice value from the buyer and repays the discounting entity. Who provides invoice discounting services?Generally, invoices are discounted with third parties, including banks, NBFCs and other financial institutions.

Invoice discounting is a method of raising finance by leveraging unpaid sale invoices. It is a quick way to raise finance by offering a discount to the lending company. This article discusses the emerging technologies in invoice discounting platforms.In the past couple of years, the invoice discounting process has seen radical changes due to various invoice discounting platforms in the market. Such platforms have improved the invoice discounting process’s efficiency, speed, and dynamism. Technology-driven firms use machine learning and blockchain technology to make the invoice discounting process transparent and safe. Let us discuss the emerging technologies in invoice discounting platforms:Blockchain technology: Invoice discounting is a process which involves more than one stakeholder.

Invoice discounting is an invoice financing method wherein the unpaid invoices of the company are leveraged to raise working capital. It provides quick access to funds by giving discounts to the lender company in exchange for early payment of invoices. This article discusses in detail the accounting entries to be passed at various stages of the invoice discounting process.Various invoice discounting platforms are available in the market. A business entity can sign up with one such platform to initiate the process. The lender may demand documents from the buyer, such as open and accepted invoices.