There are 2 ways to make more profit: Increase Top Line Revenue and/or Reduce/Manage Costs & Expenses –
Are you managing your Vendors? Are you paying the vendor according to the quote? Are you being billed according to the terms set forth in your procurement contract?
With Automated Payables Management, all of the documents related to the vendor are saved to one file that you can access from any internet device at anytime, anywhere. We review the bills & compare them to the contracts to verify that the bills are in fact outstanding. Finally, we assist you with managing cash flow by preparing visual reports that show exactly where you stand (cash in the bank) v. what you have coming up to pay, with a chart & timeline. Here is a visual snapshot…
Vendor management is extremely important for a successful business. Most small business owners spend quality time on procurement management—sourcing and selecting the most appropriate vendors—however, they completely forget the second piece in the process—vendor management. The short-term benefits of actively managing vendors are obvious and include reducing cost and risk within your company. The long-term benefits are not as obvious and include increased flexibility and simplicity, and building mutually beneficial relationships which support your unique business strategy.
A clear vision and understanding of your company’s culture is essential in properly designing vendor management within your company. The vendor management function exists to support your business strategy! Once you are clear on your vision, you are ready to set up your vendor management strategy, process and controls, vendor performance management, and supporting technology. In this article, we will walk you through eeCPA Best Practices for vendor management within your growing company!
The usefulness of QuickBooks is determined by how well you know how to use the software! One way to maximize the effectiveness of QuickBooks is to actively monitor Vendor profiles. Before you even issue a payment to a vendor, make sure to completely set up the vendor. This includes putting in their address, phone number, contact name, email address, and EIN. Flag the vendor as “Eligible for 1099” if the vendor meets the entity type that requires that you furnish a 1099-MISC at year end. See our prior blog post on that topic for more information.
Excel is your best friend when it comes to updating your vendor list. QuickBooks allows you to export your Vendor List, make all of your changes, and easily import it back into QuickBooks. This allows you to make changes to the Vendor List more quickly and easily!
How to Export:
You can export your Vendor List when you are in the Vendor Center. Simply open the Vendor Center and click on the Excel icon at the top middle. A drop down menu will appear. Select “Export Vendor List”, then choose “Create new worksheet”, then be sure “in a new workbook” is selected. After you export to Excel, keep the same cells but edit the information within each column. Make sure you are following these Column Headings. In Excel, you can deal with duplication issues and also implement consistency with vendors. For instance, with vendors who are individuals, it is a best practice to use the last name first and then the first name.
The Export file may not have an SSN or EIN column. Add a column and use the title “Tax ID”. In this new column, you can record the business or individuals tax ID to import back into QuickBooks.
How to Import:
First, back up your company. (File > Back Up Company) It is a good practice to back up your file regularly so now is a perfect time to do it! Then, go into the Vendor Center and click on Import function. QuickBooks will walk you through the steps to import your Excel file and all the changes. You will have the ability to review the changes before accepting the Import.
The Alias feature is a best practice to use when you are downloading and importing bank and credit card transactions. The Alias option, which pops up when you add transactions, allows you to search your current vendors and match them appropriately. This ensures that you have a clean and accurate Vendor List so that you don’t have a hundred different names for the same vendor. Eventually, QuickBooks will learn your vendors and match them automatically when you add a transaction! The Alias feature allows for the most ease in searching transactions as well! For instance, if you want to see how much you paid for your phone in the past year, simply go to your vendor list and to your phone provider. Now you’ll be confident in the totals since you used the Alias option. In addition, the Alias feature makes compliance work such as filing 1099-MISC in January much easier. Again, you can be confident with the Vendor totals that show up in your well-organized Vendor List. Doing the job right the first time is always going to save you time and money. If you use the Alias feature, reconciling and accounting will become much easier and the information in QuickBooks will be much more valuable.
Larger businesses have the luxury of spreading out the vendor payment process among several individuals. However, with the smaller business, one employee usually wears many hats. In the bill payment area, this can be an invitation for fraud and embezzlement.
In order to avoid embezzlement, it is important to set up permissions and a workflow process. The clerk should open the mail and scan the bills. Next, the accountant codes the bills by inventory/expense account and verifies pricing per the contract or purchase order. Next, the owner approves the payment. Then, the cash flow is updated instantly. Finally, the vendor bill is stored directly in accounting file for easy review and access.
During this entire process, the accountant should be tracking outstanding payables to determine the cash flow required.
Let eeCPA help you avoid any misappropriation in the vendor payment process. We offer an Automated Payable Management process that will allow you full control of the payment process, minimize the potential of employee embezzlement, avoid adding additional employees, and save you time and money.
Call us today in order to set this up for you and your company!
In setting up proper controls, be cautious by following these three DON’Ts:
Vendor management enables you to make sure your vendors continue to match your company’s goals and ensures the vendors are not becoming a risk to your company’s continued success and profitability.
If you have any questions for your specific business, please contact us at 480-596-8299. We look forward to assisting you with your payable process and streamlining your vendor management! Give us a call for more information implementing Automated Payables Management for your business.