Effective vendor management is crucial for maintaining healthy cash flow, ensuring quality, and mitigating supply chain risks. This guide covers procurement best practices and accounts payable automation strategies.
Vendor Selection and Onboarding
A robust vendor selection process reduces risk and ensures compliance with procurement regulations. For public sector organizations, this must align with Public Contracts Regulations 2015.
- Conduct thorough due diligence including financial health checks
- Verify insurance coverage and regulatory compliance
- Request and verify trade references
- Assess cybersecurity and data protection practices
- Review Modern Slavery Act compliance statements
- Establish clear SLAs and performance metrics
Contract Management
Well-structured contracts protect both parties and provide clarity on deliverables, payment terms, and dispute resolution. Ensure contracts include provisions for price reviews, termination clauses, and liability limits.
AP Automation Benefits
Automating accounts payable reduces processing costs by up to 80% and virtually eliminates duplicate payments. Modern AP systems use OCR and machine learning to extract invoice data, match to purchase orders, and route for approval.
- Three-way matching (PO, receipt, invoice) automation
- Electronic invoice capture and data extraction
- Automated approval workflows based on business rules
- Early payment discount capture
- Fraud detection and duplicate invoice prevention
- Real-time spend visibility and analytics
IR35 and Off-Payroll Working
When engaging contractors and consultants, ensure compliance with HMRC's off-payroll working rules (IR35). Medium and large organizations must determine employment status and handle tax obligations accordingly.