Make It Easier to Work with Contractors
It’s time again. You need to pay the 1099 contractors that work with your company. Before you cringe at the hours and logistics, know that tools such as vendor ACH payments, direct deposit, and online payment solutions can make this process much, much easier.
Look at what you’ve got going now.
You can’t improve without finding out what you’re doing now. After all, many processes are so organic, you don’t always question them. Even if it’s just a few steps jotted down on a napkin, it will help you pin down how you review and make vendor payments to contractors. Include notes about how long you feel each step takes and the areas frustrate you the most.
Ask these questions to build detail:
- Is the process entirely paper-based?
- Is it spread out over multiple systems like email, spreadsheets, or online banking accounts?
- How long does it take to complete the process from inception of an invoice to payment?
- How easy is it to locate contracts and past invoices?
- What part takes the longest? What part do you dread the most?
- Is it easy to track and record payment history?
- What payment feedback have you received from contractors?
- Is your organization following the separation of duties to protect from internal theft or fraud?
- How many contractors are you working with? Do you plan to add more?
Set up your infrastructure.
Here’s where the mapping process pays off. You’ve identified how you handle contractor payments, along with challenges and areas of improvement. Now you can use that knowledge to build an infrastructure.
If you’re not using an online payment solution for ePayments, it’s time to do so. Paper checks complicate the payment process (takes too long, supplies, mail, reconciling). Other electronic forms of documentation and payment might exist across multiple platforms or programs, making it hard to locate the correct invoice and process it in a timely manner. An online payment solution will allow you to quickly and accurately pay contractors online while tracking each step of the process.
Once you move to an online payment solution, make sure you invest time in setting it up properly (workflows, attaching bank accounts, integrating with accounting software, etc.), learning the system, and getting your staff members trained. The good news is that many of these solutions are cloud-based and fairly intuitive. If you can use an app, you can use them. Turn to training materials provided by the provider, or ask the company for their support with training feedback and materials.
Now that you’re set up with the right personnel and tools, let’s dig even more into how you can simplify vendor payments.
Make it simple for you to organize, review, and approve payments.
When you have all invoices and payment history existing in one spot in an online payment solution, it streamlines the payment process for contractors.
For example, with Bill.com, you can store all related documents together securely in the cloud. They aren’t attached to a specific computer or email account. No matter what device you use or where you are, you can navigate to a contract or statement of work to verify contractor information in just a few clicks.
Online bill payment solutions allow you to automate manual portions of invoice review and payment. For example, an employee is next in line to review a contractor’s invoice. The solution lets her know it’s her turn and will remind her if she doesn’t get to it within a certain amount of time. From there, the invoice continues to the review cycle until approved for payments.
The automation services to enforce the separation of duties. You can customize review cycles by contractor name, dollar amount, or more. Unauthorized individuals cannot access the system or its workflows.
A bill payment solution also tracks each step of the invoice lifecycle, from review through to payment so it automatically creates audit trails.
Take a standard approach to accepting and paying invoices. This is non-negotiable.
If you work with contractors a lot, it’s easy to get buried in mounds of invoices and SOWs. They land in your email, get lost or pushed down by other tasks, or require you to root through electronic file folders to find contracts.
You must plan out a common way for:
- All contractors to submit invoices.
- How you will pay these invoices.
First, require all incoming invoices to arrive digitally through one solution (like this one). This frees up your email box and reduces the chances of losing them—mainly because the solution will provide support via notifications, dashboards tracking progress, workflow automation, and storage. Everything you need is in one place.
Next, let all contractors know that you will be issuing digital payments only. If you have 50 contractors that need to get paid, paper checks will rob you of hours. Who has time for that? All contractors should sign up via your preferred solution to receive ACH transfers or other digital payments.
To accompany these mechanics, create a quick run-down for first-time contractors that will share where to sign up for payments, how to enable ACH payments, how to check the status of payments, and what turnaround time they can expect for paying their invoices. This document serves as the guidelines and sets expectations. Remember—do not let contractors deviate from these guidelines. If you allow that to happen, you’ll quickly find that any efficiencies you cultivated with standardization will diminish.
Ready to simplify your contractor payment process?