Vendor Relationships Management Best Practices: Avoid Overpaying & Delays

A vendor issue can ruin your business more quickly than anything else. An unexpected price increase reduces your margins, a delayed shipment throws off your entire schedule, and inadequate communication makes straightforward orders into a headache. Is that your story? Vendor relationship management best practices aren’t just about keeping suppliers satisfied. Rather, it’s more about ensuring your business runs smoothly and stays financially stable. A few smart strategies can help you avoid hiccups, control costs, and prevent delays.

Sharpen your negotiation skills

“Pricing and contract terms” are frequently mentioned by companies as their largest vendor management difficulty. Negotiation isn’t limited to the major players, but many small business owners take the first price that is provided. The vendors expect it!

• Finish your homework. Examine competition prices and market rates before signing a deal.
• Enquire about bulk savings. Many providers provide tiered pricing, even for tiny businesses.
• Strategically lock in long-term contracts. Longer contracts can help you negotiate better prices, but be sure the conditions are suitable enough to save you from supply chain problems.
• Don’t be scared to leave. If a vendor isn’t budging and you know you’re paying too much, consider other options.

Pay vendors on time and in the right way

Late payments can make vendors hesitant to work with you, or worse, they may start adding penalties or cutting your supply. 60% of businesses are already struggling with cash flow management.

That’s where Forwardly comes in. Real-time payments mean your vendors get paid instantly, no processing delays, no pre-funding, and no headaches. To take it a step further, Forwardly’s customizable approval workflows help prevent unauthorized payments and ensure the right people sign off before funds go out. Set thresholds, assign approvers, and eliminate the risk of overpaying or missing a critical invoice.

Other ways to keep payments running smoothly:

• Automate payments so you never miss a deadline.
• Take advantage of early payment discounts (some vendors offer 1-2% off!).
• Use an AP tool like Forwardly to streamline approvals and payment tracking.

Communicate clearly to prevent headaches

Ever played the game of telephone as a kid? You start with “Let’s meet at 10,” and by the time it reaches the last person, it’s somehow turned into “Let’s eat a hen.” Miscommunication in business works the same way but instead of a funny misunderstanding, you end up with missed deadlines, surprise costs, and frustrated vendors.

Here are some tips for maintaining order:

• Put everything in writing. When matters become complex, don’t rely on verbal agreements to remain valid.  To prevent misunderstandings later, clearly state prices, delivery dates, and expectations in contracts or communications.
• Describe quality in detail. What does a job well done mean to you?  To avoid any surprises, make sure your vendors are aware of what is and is not acceptable.
• Make the payment status clear. It shouldn’t be necessary for vendors to contact you in order to enquire about their payment schedule.  By using platforms like Forwardly, you and your vendors can monitor payments in real-time and cut down on needless back and forth.

Also read: 5 Common Mistakes to Avoid in Vendor Relationship Management

Double-check invoices

Do you believe your invoices are always accurate? Think again. Approximately 20% of vendor invoices contain errors, such as inaccurate pricing and duplicate charges. If you don’t pay close attention, you can be overpaying without even knowing it.

Here’s how you can keep your money where it belongs:

• Give bills a second look. It’s easy to believe everything is well, yet mistakes do happen. Before sending payment, double-check the price, quantities, and any unexpected fees.
• Invoices should be in accordance with contracts. If the numbers do not match what you agreed on, you should speak with your vendor.
• Automate approvals. Manually checking each invoice takes time. Using Forwardly can help with identifying differences before they become costly mi

Build relationships, not just transactions

Your vendors aren’t there just for the transactional relationship but key players in keeping your business running smoothly. If you treat them like partners instead of just vendors, you are bound to see how it positively impacts your operations.

• Pay on time, every time. Late payments can ruin your relationships. Vendors who know you’re reliable may offer better deals or more flexible terms.
• Say thanks, A simple acknowledgement. A positive review, or even sending more business their way can go a long way in building goodwill.
• Be upfront about challenges. If you’re dealing with cash flow issues, don’t go radio silent. Many vendors are open to adjusting terms if you communicate early.

Better vendor management practices, better business

Vendor relationship management best practices can help you strengthen vendor partnerships and get the most value from them. When executed properly, they result in more seamless operations and more robust connections. Avoid costly blunders and maintain strong vendor relationships by being proactive with fair negotiating, transparent communication, and on-time payments.

Struggling to keep up with payments? Forwardly’s accounts payable solutions ensure that vendors are paid immediately; with no delays, no pre-funding wallets, and no stress. Get started with Forwardly for free today! Because, let’s be honest, there are greater things to do than track after invoices.