Most companies try to avoid placing orders that rely on one time vendor (OTV) accounts. The mere mention of one time vendors is often taboo. In an ideal world, all purchasing would be routed through approved suppliers who have terms, conditions and standards that comply with company rules.
However, in our experience, most companies still have workaround processes for when employees must place orders with non-registered vendors, but know there won’t be enough ongoing business to justify going through the supplier onboarding process. On other occasions, a purchase and payment will have already taken place – often to meet an emergency requirement – before anyone can even mention onboarding the supplier or conducting due diligence.
And while an ad-hoc workaround may be intended to account for occasional one-off and emergency purchases, we find that it’s not unusual for the same vendor to appear on these unofficial lists of one time vendors multiple times. And some are even used regularly – but the vendor may struggle to make the transition to registered vendor because their existence is shielded from oversight – and from the attention of procurement managers.
On the other hand, we have worked with companies who have chosen another approach to deal with these exceptional purchases. After accepting that some one time vendors are unavoidable, regardless how comprehensive their procurement policies or how strict their rules, some companies look for a controlled process to manage unexpected spending, and then look to register companies that repeatedly appear in one time vendor accounts.
A managed process for OTV invoices
As a start, to be able to process an OTV invoice, a special OTV vendor account needs to be maintained as the vendor master record.
Then it is possible to process invoices that have a purchase order (PO) – and those that don’t.
Yes, you heard it right: a PO invoice against an OTV account!
Each time AP process an invoice against this OTV account an extra window provides fields to record the vendor’s details.
We usually recommend that such invoices are routed to the AP manager for a one-off approval before the invoice goes on its way.
When these invoices are processed through vendor invoice management (VIM), it is easy to run a report and see if a vendor appears on the list multiple times or not and take next steps from there.
As always, there is no right or wrong way – and the ideal solution depends on your requirements and the needs of your organisation.
ES2P has worked on multiple VIM projects, where we’ve implemented such solutions for OTV invoices. Drop us a line if you want to find out more.
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