Friday Rant: Getting A/P and Supplier Management Wrong -- A Supplier's Perspective

Some might say that as both a consultant/analyst with subject matter knowledge and business owner, I'm in a position to study the Spend Management sector from a truly unique vantage point. Namely, I constantly talk to folks in both procurement and A/P about the technology they're buying while also having frequent discussions with many of the vendors and services providers pushing their software and services wares. But I'd argue that most important, as one who runs a business and needs to get paid, I also learn about the sector as a supplier. And boy, can I tell you stories about screwed up supplier management processes (even from companies who many would think on first glance would be good at it) -- without naming names, of course.

So without further adieu, I'll list a few examples of how companies can damage supplier relationships -- or simply show how inept and functionally uncoordinated they are -- from an A/P and supplier management perspective based on my experience as a supplier:

1) Arbitrarily extending payment terms because of a new company policy in the middle of a specific engagement vs. in an orderly fashion when starting a new project/program on a new PO (or based on a new fiscal or calendar year, with sufficient notice)
2) Moving to a global shared services environment that adopts local customs vs. those of the country in which the work is being done (e.g., not having people pick up the phone during regular business hours, not having easily accessible voicemail, not returning phone calls on the same business day, etc.)
3) Moving to a shared services environment without fixing broken visibility and payment processes in the first place, adding a potential language barrier on top of A/P idiocies
4) Forcing a services supplier to account for their time on a time and materials basis for a large engagement when a project-based initiative would actually be less expensive
5) Inane policy when it comes to services procurement contracts that in the end, become self-defeating
6) Not having anyone on staff who understands what can go wrong with international wired funds (and all the elements that need to go into one vs. domestic transfers). NB: this one is surprisingly common
7) Offering no visibility into invoice status despite requiring electronic invoice submission
8) And in summation, failing to realize that 'all -- or even some -- of the above' negligence can jeopardize contracting with the best sources/suppliers for future projects

Now granted, my experiences only reflect those of a rather small services supplier. But when you have A/P people on the phone who acknowledge to suppliers that they've got problems, wouldn't you think they'd work to improve things? Unfortunately, when it comes to A/P from a supplier vantage point, it seems that the Earth's plates move faster than any type of progress. Which is further proof why procurement and finance need to think long and hard about external process change in how they manage and pay suppliers than simply internal technology adoption and headcount slashing.

Seriously, why can't I just call Marge any more and get a payment status update? I know the answer. But trust me: while you'll never digitize Marge, you should at least try to understand everything she did before you give her a life of unanticipated early retirement.

- Jason Busch