Requiring Vendors to use SAP system

USA Discussion in 'General Tax Discussion' started by AGH the CPA, Dec 13, 2018.

  1. AGH the CPA

    AGH the CPA

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    I work for a small manufacturing firm - we have a super small team (me and half a person). Recently we had a client advise us that the only way they would process invoices (including several outstanding ones) would be for someone from our company to follow a 9 page procedure guide to enter EACH invoice it into their SAP work order system. Figure at LEAST 20-30 minutes per invoice.

    WTF?

    Can a business REQUIRE a vendor to basically do their work for them (we are essentially entering all of our data into their system, matching it up with a PO and putting in their reference info) in order to get paid???
     
    AGH the CPA, Dec 13, 2018
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  2. AGH the CPA

    kirby VIP Member

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    The vendor can require this and you are free to refuse to do so, and thus lose the business, unfortunately. Very similar to the new kiosks in McDonalds, where they want you to do the data entry of your own order. A "plus" for them a "minus" for you.
     
    kirby, Dec 14, 2018
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  3. AGH the CPA

    Tempe Tony

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    @kirby - How would the client be able to mandate that? If the manufacturing firm were to sue the vendor who owes the invoices, seems an open and shut case to me, in that if the judge finds goods were sold to the defendant, and defendant company never paid, they need to pay up.

    THE ONLY way I could see an exception is if a contract were presented by the purchasing company at or BEFORE the purchase order was transacted, which stated that payment of invoices would only occur if the selling company followed that oddball SAP process.

    Bottom line is if this is a material amount, seems to me a business attorney's advice might be worth it. I have no background in law, hence my views above are only speculation.
     
    Tempe Tony, Dec 22, 2018
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  4. AGH the CPA

    kirby VIP Member

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    I see: I responded only to the issue of new invoices after notification of requirement to use SAP and you are speaking to the existing invoices, prior to notification to use SAP. You are correct that the manufacturing firm can argue the point and most likely win in court. Consider though that this would, no doubt, irritate the vendor and may affect future business versus biting the bullet and inputting the outstanding invoices into SAP.

    I would hope the vendor would allow the manufacturing firm to submit a file already formatted to the SAP specs versus requiring time-consuming manual online input to SAP. At least the formatted file process would be faster although requiring some programming modifications.
     
    kirby, Dec 22, 2018
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  5. AGH the CPA

    bklynboy VIP Member

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    I work for a large company and deal with thousands of vendors. We also use SAP and require vendors to input their invoices in our system before we process for payment which is very similar to what the original poster was asking. This is perfectly legal and a condition of being a vendor for our company. We do not staff to input all the invoices (which can be thousands a week) and we have not had any issues with vendors not wanting to do this as I believe with most large firms its the typical way to go. As Kirby stated if they don't want to do this they are free to go somewhere else but my experience is over time its not really complicated and takes a lot less than 20-30 minutes once you know the process. I don't see the legal issue Tempe Tony is referring to. Its documented in the agreement .
     
    bklynboy, Dec 22, 2018
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