Background
Every business has many stakeholders and the importance of each stakeholder is different from the other. One such stakeholder are the vendors of an organisation. Vendors are a critical participant of various cycles in an organization such as procurement to pay, record to report, and more without whom the business may not thrive as it does. Any supply chain begins from the vendor; thus, vendors are the first step from where the organisation initiates its core activity whether it be manufacturing or service.
Having a transparent vendor eco-system is crucial not only for an organisation but also for the vendors. It helps in saving time and costs and improves vendor efficiencies.
Vendor efficiencies that can be achieved through a cloud-based vendor portal
- Organising the vendor base for large organisations that have numerous vendors is an imperative task, the vendor portal should be able to assist the organisation by classifying vendors according to their activities, associated risks, reliability, etc. The portal should be able to prepare a database of vendors with their necessary details which helps in storage and retrieval. Moreover, the portal should help in building a system wherein invoice status, payment status, past performance of the vendor, etc. can be tracked.
- Mostly a cloud-based vendor portal is a two-way portal that can be accessed by the organisation and the vendors themselves. This helps in collaboration and reduces time spent on redundant activities such as updating addresses, seeking basic information, etc.
- Reconciliation which is one of the fundamental pillars of GST should be done through the vendor portal. If there is no, partial or delay in vendor compliance, an organisation’s Input Tax credits, as well as cash flow cycle, go for a toss.
- Timely payment to vendors as per their payment terms can be done with the help of the portal. This leads to reduced interest costs on delayed payment and improves the credit rating of the organisation. Moreover, automation of the entire accounts payable process can be done.
Vendor efficiencies that can be achieved in the manufacturing sector
Apart from the above benefits, the vendor portal can have advantages that are specific to the manufacturing sector. One of these is job-work-related management.
Job-work is an essential part of manufacturing activity. A lot of manufacturers rely on job workers to complete a part of the entire manufacturing for them. In such cases, it becomes an indispensable process. There are various reporting requirements under the GST law with regards to job-work. In these regards, any vendor portal should be able to help an organisation in the following manner:
- To maintain the database of all job-workers. To be able to track inventory given to various job-workers and their respective processes. Should provide end to end support right from purchase orders to invoicing in case of job work.
- Should help the organisation or the principal manufacturer to keep a track of the credit of GST paid on procurements to be availed, which are sent to job-worker for further processing.
- The job worker should have access to the portal wherein they can key in the record of various processes such as production entry, waste remnants declaration, invoices, credit debit notes, etc.
- The solution must provide seamless integration with the ecosystem to populate PO, GRN, Payment details which bring in complete transparency.
Vendor efficiencies that can be achieved in the service sector
One of the important players in the service industry is the banks and financial institutions. For banks, the vendor portal can prove to be a blessing due to the following advantages:
- Should assist in easy integration with multiple ecosystems at the backend & other payment systems.
- Provides the complete User Access Management compliance which is regulatory for the banking sector.
- A real-time reconciliation with GSTR 2A with the vendor invoices and a quick response to get the GST Reconciliation status in milliseconds.
Conclusion
A robust vendor management system in place can ease basic day-to-day accounting issues. Right from the creation of vendor to the accounts payable to the Availment of the input tax credit. Moreover, with GST coming into play, the importance of vendor management cannot be insisted upon enough. The entire input tax credit of an organisation depends on the compliances of the vendor, invoices received and recorded from him, and payment of invoices within the stipulated timeline. Cygnet’s vendor portal provides seamless vendor management services to enable the organisations to be future-ready with updated features like GRC score, to check the vendor credibility along with the easy plug and play model.
