Vendor management and your business finances
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There are costs that many businesses will be aware of – one of the biggest resources a business can invest in is their people, closely followed by office-space. However, one of the aspects of successful cost-management in business that is regularly overlooked is that of vendor management. It is not only startups that fall foul of these hidden costs; well-established businesses are often paying a significant amount without realising and fighting against the company ethos of ‘the way it’s always been done.’ If your team or business has become fixed in its thinking and behaviour, it might be time to re-evaluate your ethos, and build company values that your employees can buy into.
Successful vendor relationships are invaluable to business. Your vendors supply you, as a company, with everything you need to function, from an integral part of building your product to your pens, stationary, and other office supplies. Providers of your essential services can give either a boost in profits or a downturn, depending on their reliability. This is why managing your vendors is also a form of risk management. Part of ensuring its success is to have a dedicated team of individuals who are responsible for monitoring and auditing your vendors. You may wish to create a team to fulfil this function within your organisation, or you can simply add it to the responsibilities of an existing senior management team. However you address this, the key point is that you know exactly who is accountable for managing the vendors.
If you have a small company, or are looking for a cost-effective way to manage vendors, then a dedicated vendor management system is an excellent option. Instead of your organisation managing the vendor relationship internally, an external company are responsible for handling the vendors. This will include, but is not limited to, liaising with appropriate departments within your company, such as HR; creating and maintaining a paper-trail, ensuring that all expenditure is documented and accounted for to maintain accurate ledgers.
An external vendor management company will also assist you in data upkeep relating to your vendors. It is imperative that you are aware of, not only who all your vendors are, but who their competitors are and where they currently sit in the market. A comprehensive list will allow direct comparisons between vendors, allowing you to make the choice as to which will be the most beneficial for your company. It is worth carefully considering the advantages outsourcing vendor management may provide. There have been success stories of financial aid during COVID, and using an external company for keeping your vendors economic may be the most financially viable option for your company.
Overall, the communication and comparisons involved in successful vendor management do not leave room for error. Specific and watertight contracts, keeping an awareness of the market, and not remaining with a specific vendor through loyalty or idleness could ultimately save your organisation thousands of pounds. Ultimately, in the current business economy, successful vendor management could make all the difference.
