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Remove Excess Vendors from Your AP Register: Choosing the Right Suppliers

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A reoccurring pain point many businesses experience is finding quality vendors who deliver on what is promised. Indeed, one of the most important parts of managing your accounts payable register is not having excess suppliers – that is, suppliers that are not adding value to your company.

It is hence crucial to know how to choose the right supplier for your business. This way, you can have two or three reliable vendors on your AP register, rather than five or six that do more harm than good.

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Your accounts payable refer to what you owe vendors or service providers for goods or services purchased on credit. That is, any time you buy services or goods, the amount you owe is added to your AP balance. Since the money is owed, accounts payable are regarded as liabilities.

A proper accounts payable process will begin with a reliable chart of accounts, which will enable you to post any expenses to the right account. The AP process is considered complete when you issue an electronic payment or check to the supplier for the amount owed on the stated due date or before it.

You don’t want to lose money or make things more frustrating for yourself with vendors who are not worth the process. Furthermore, with a proper selection process, it will be easier to control your vendors and you can gain a competitive advantage.

For instance, if you need to do an important rush job for a customer, your vendor will be more likely to go the extra mile if you are paying them 1,000 USD per month rather than 250 USD per month.

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How to Choose the Right Supplier for Your Business

What’s the cost of having the wrong partners for your business?

At worst, a large sum of money and long, drawn-out lawsuits.

If you want to choose the right supplier for your company, doing your due diligence is crucial.

Unfortunately, many business owners consider potential suppliers based only on sales calls and marketing, without conducting any proper assessment. While this can spring from frustration borne from previous results, it is important to remember that ultimately suppliers are selling you a product.

Furthermore, it may be wise to periodically reassess what you expect and require from your suppliers. Schedule follow-up meetings so your suppliers can brief you on their progress and you can inform or remind them of your expectations.

For choosing the right supplier, bear the following things in mind.

Define the Process

What are the methods you will use to find suitable vendors?

  • Will you directly approach suppliers for estimates and proposals? Or will you publish your requirements in trade publications and call for bids?

  • What is your time frame for your selection process?

  • Appoint qualified employees to review the proposals and to come up with a shortlist of suitable vendors to choose from.

Evaluate Bid Submissions

Evaluate your options after you receive your bids.

  • Compare each vendor to determine which one best fits your quality standards and budget. Don’t choose one that will cut into your profit margin.

  • Check the validity of your vendor’s bid. For example, if you’re working with a dropship supplier, you can request ISO compliance documents and a product sample. Remember, you are considered complicit in fraud if you end up selling products that belong to a different organization, even if it was your vendor that stole the products.

  • After you choose a bid, negotiate your contract. If you are concerned about it, you can always consult a lawyer.

  • It is also possible to conduct a “trial run” through a short-term contract. This way, in case things don’t work out, you can cut ties before too much damage is done to your business.

The Type of Service is the Vendor Offering

What is the kind of service your supplier is offering? What will that mean when you measure the results after they deliver their product or service?

If the vendor is delivering a tangible product (think technology companies or food distributors), measuring the results against your expectations will be relatively simple.

However, you might need to be more cautious when measuring results when it comes to vendors offering services or intangible products, such as consulting or marketing.

Third-Party Referrals

Unless a supplier is just starting out, they should have a proven track record of meeting or surpassing expectations, as well as third-party referrals. You need to know who the supplier has worked with in your industry before.

Ethical Compliance

Many countries have taken steps to outlaw goods made with slave labor or child labor. Several larger brands have been splashed on the front page of newspapers for such violations. Even if it were not a legal matter, taking care that your products are ethically sourced should always be on your agenda.

Verify that:

  • Your goods are made in safe working conditions

  • Your goods are not created with child labor or slave labor

Financial Security

Does your vendor have a sufficiently strong cash flow to deliver what you require by the set due date? A credit check will be useful to help you determine whether they might go out of business in the middle of one of your important projects.

Comprehensive Record-Keeping

Your requirements and standards may change throughout the course of your relationship with your supplier. Often, importers will adjust quality requirements and AQLs depending on customer requirements, quality, and history with the vendor.

The most reliable vendors will keep their records and information updated. Information your vendor should keep updated includes but is not limited to:

  • Regulatory requirements, including any alterations in standards and regulations

  • Product requirements and specifications, including materials, colors and dimensions

  • Packaging requirements, including retail printing files, labels, and shipping markings

  • Quality standards, including performance standards, defect classifications and issues in quality


How to choose the right supplier depends heavily on your preparation – the devil’s in the details.

Ultimately, however, no matter how detailed your preparation, you will not truly know how your suppliers will perform until after they begin working for you.

In case a supplier doesn’t provide results on time or is slow to respond, you can terminate the relationship, since such behavior often does not change. Conversely, if your vendor meets or surpasses your expectations, ensure that you nurture that relationship.

Removing excess vendors from your AP register is one aspect of running your company smoothly. Another is bank reconciliation and credit card reconciliation.

NextGen Accounting will do a custom setup for you free of charge. Our management team has decades of experience and includes former executives of Barclays Bank, Bank of America, and ICBC. From us, you’ll get reliable documentation every single day. If it doesn’t pass audit, we’ll pay the fees.

If you want your business to run smoothly with the help of credit card reconciliation services and bank reconciliation services, contact us now!


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