EZPayManager

Payment software solutions from ACOM help businesses minimize vendor complaints, and manage AP processes more effectively
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ACOM Provides a Total Accounts Payable Solution

ACOM also provides document management systems for the accounts payable process enabling you to:

1. Create a purchase order and issue it electronically
2. Capture the emailed invoice and printed receipt of goods, and reconcile the electronic files.
3. Automatically route the invoice for approval.
4. Create an electronic check, eliminating the costs and security risks of pre-printed checks.
5. Send payment and remittance advice electronically.
6. Link and store all supporting documents into one electronic file for instant retrieval.

Learn more about ACOM's Document Management for Accounts Payable

EZPayManager

Payment software solutions from ACOM help businesses easily transition their corporate payments from checks to electronic payments (ePayments)
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How to Deal With 5 Common Vendor Payment Complaints

This article is reprinted/republished by the express written permission of IOMA (The Institute of Management & Administration). ©2007; for more information about IOMA publications visit www.ioma.com

Vendor complaints are a fact of life in AP, but that doesn'’t mean you can't eliminate the aggravation they bring. All you have to know is how to either stop them from happening or how to respond in a way that makes the vendor happy.

Most vendor complaints have to do with either nonpayment, late-payment penalties, missing payments already sent, not honoring special payment deals, and simple misunderstandings. Here are five of the most common gripes you'll get and how to deal with them.

1. Why haven't you paid this invoice?
2. You owe us a late-payment penalty.
3. Where’s the payment you said you sent?
4. You broke our special deal.
5. Nobody told us to do that.

1. Why haven't you paid this invoice?

There are three reasons AP will sit on an invoice:

1. There's no purchase order
2. There's no record of receipt of the goods
3. There's a problem with the quality of the goods

What to do: If there's no PO, ask the vendor who in your company ordered the merchandise. If they can't tell you, then you do not have to pay the invoice. If you have the PO but no receiving record, ask the vendor to send you their copy of the delivery receipt and check the signature.

Often, an invoice is not being paid because the quality of the goods delivered is not up to par. Sometimes the only recourse a company has with such a vendor is to refuse to pay until the matter is resolved. The resolution is usually not the AP department's job, it's typically the purchasing department. Sometimes, refusing to pay is the only leverage a company has with a vendor delivering substandard goods. So, in this case, all you can do is pass on the complaint to whoever can resolve it.

2. You owe us a late-payment penalty.

Nothing is more aggravating than having a vendor charge a fee for paying an invoice late. Many AP departments simply pay these late fees because they feel they have no choice. Not true!

What to do: Start by telling all your vendors that it is your company's policy not to pay late fees. Let them know that the rationale behind this is that all bills are paid on time. Often this is all you need to do. Also, ask purchasing to include no-late-fee language in any contract they sign or credit applications they fill out. Then, when a vendor calls to find out why you haven't paid the late fee, you can simply refer them to the contract or credit agreement.

If your purchasing department balks at this, look at the contracts and credit agreements. If there is no late fee language in the document, you can try and negotiate on that ground. That is, if you are not contractually bound to make late fee payments, your vendor will probably have a difficult time forcing the issue. Should you decide not to pay these fees, make sure to check future invoices from those vendors closely. Reason: Some vendors will slip old charges on new invoices.

3. Where's the payment you said you sent?

Often, AP and purchasing will have different information about the same vendor. For example, the vendor moves and sends a change of address notification to the purchasing department and then waits for its next payment. The payment eventually shows up after first being directed to the old address. So, the vendor sends another change of address notification to purchasing. Eventually, the vendor calls you in a rage.

What to do: This can be avoided by telling purchasing to forward the change of address forms to AP. Of course, they may forget to do this, so there is a better solution. If only one master vendor file is used by the entire company, this problem can be avoided completely. This means, of course, that several departments within the company will have to work together to establish the file and to set up controls over who is authorized to make changes to it.

4. You broke our special deal.

What to do: When a special arrangement is made, spell it out in writing. It is imperative that when you come to an agreement with the vendor that you are both on the same page. Some AP managers send simple confirmations of special deals or promises to the vendor.

5. Nobody told us to do that.

Many vendor complaints arise from simple misunderstandings due to poor communication. That is, the vendor just doesn't know how it is expected to perform. The reason for this is quite basic: No one tells the vendor what to do.

What to do: AP managers need to educate the purchasing department on what is needed to ensure that payments get made on a timely basis the way the vendor expects. Since the main source of information for the AP department is the PO, purchasing should make sure that it contains all the terms of sale as agreed upon with the vendor. Then, AP will at least know when and how the vendor expects to be paid.

This information must also be passed along to the vendors. Otherwise, they may be sabotaging the payment process without even knowing it. Once both the purchasing department and the vendor know exactly what is needed for AP to make timely payments, many vendor disputes will disappear. Remember, the vendor has just as much interest as AP does in avoiding these conflicts. All it wants is its money with as few problems as possible.

If purchasing is having difficulty passing along information about your needs to their vendors, offer to help. You might write up a page of instructions that can be given to all vendors so the playing field will be level. Go over it with purchasing to make sure everything in it is understood.

Final Point

Of course, all of the issues and disputes mentioned above will vary in intensity from company to company. Plus, your company may have some unique issues with vendors. The AP manager who can identify and resolve these issues will be on their way to a smoother working relationship—and will have much less aggravation to boot.

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