{"id":4208,"date":"2020-02-11T22:55:01","date_gmt":"2020-02-11T22:55:01","guid":{"rendered":"https:\/\/www.peeriosity.com\/shared-services\/articles\/?p=4208"},"modified":"2022-08-24T16:34:25","modified_gmt":"2022-08-24T16:34:25","slug":"charging-for-new-vendors-to-influence-behavior","status":"publish","type":"post","link":"https:\/\/www.peeriosity.com\/shared-services\/articles\/2020\/02\/charging-for-new-vendors-to-influence-behavior\/","title":{"rendered":"Charging for New Vendors to Influence Behavior"},"content":{"rendered":"\r\n

Introduction<\/strong><\/p>\r\n\r\n\r\n\r\n

To create an efficient and low-cost process for Accounts Payable, standardization and new technology tools can only get you so far.\u00a0 The biggest factors tend to be the quality of the inputs to the process, including clean processes and procedures for goods and materials purchased by teams of professional purchasing agents, to efficient processes for requisition items where the decisions are made and approved by employees with no formal purchasing training.<\/p>\r\n\r\n\r\n\r\n

When looking for root causes of errors or identifying unnecessary complexity, cleanliness and the integrity of the vendor file are often towards the top of the list.\u00a0 And particularly for vendors who are identified on an ad hoc basis by end-users, appropriate rigor in the verification process and assessment of risk<\/a>, is complicated when the process itself is completed by users with little training, and where the businesses units don\u2019t have visibility to the issues or experience any direct cost charges for vendor creation activity that too often is unneeded and not in the long-term best interest of the company.<\/p>\r\n\r\n\r\n\r\n

This research paper is a top-level summary of a recent poll that was conducted in Peeriosity\u2019s Accounts Payable (P2P) research area<\/a>.\u00a0 For Peeriosity members, full visibility to all the details of the poll is available, including the ability to interact directly with participating peers.<\/p>\r\n\r\n\r\n\r\n

iPollingTM<\/sup> Results Review<\/strong><\/p>\r\n\r\n\r\n\r\n

Recently, Peeriosity\u2019s iPollingTM<\/sup> was used by the Payment Services Manager at a member company to explore the idea of charging business units for the costs of new vendor setups and as a way to increase visibility and influence behavior with the result of better controlling the vendor creation process. Responses were posted in real-time, with visibility to company responses available to all Peeriosity members, allowing for direct communication with peers using Peeriosity\u2019s integrated Peer MailTM<\/sup> capabilities.\u00a0 Using this approach, the poll author was able to quickly gain insights into his issue, which he described as follows:<\/p>\r\n\r\n\r\n\r\n

While historically our Shared Services operation created and maintained all-new 3rd party vendors on behalf of the business, is there a need to cross-charge a fee to individual businesses for new vendor codes to help influence behaviors? Would this assist with getting users to understand that some of the possible savings with a new vendor are likely to be offset by the cost of creating, maintaining, and risk assessing these new vendors? Plus, the additional complexity for users to select the best vendor when the vendor file has grown in part because there aren\u2019t controls in place to limit the addition of new vendors.<\/em><\/p>\r\n\r\n\r\n\r\n

The first polling question asks if member companies cross-charge a fee to the budget holder requesting a new vendor creation.\u00a0 The overwhelming response at 85% is to not charge a fee to the budget holder.\u00a0 For the balance of companies, 5% do charge with the costs visible to the budget holder, another 5% charge with the line item detail for the charge not visible to the budget holder, and the final 5% consider the concept.\u00a0 Here are the details:<\/p>\r\n\r\n\r\n\r\n

\"cross<\/figure>\r\n\r\n\r\n\r\n

For the 15% of companies who either charge for new vendor creation or are considering charging, 67% are charging for all vendors, and 33% are only charging for ad hoc vendors that aren\u2019t professionally sourced.\u00a0<\/p>\r\n\r\n\r\n\r\n

\"is<\/figure>\r\n\r\n\r\n\r\n

Here are some comments from responding companies:<\/p>\r\n\r\n\r\n\r\n