A sweet spot for supplier portals

Posted by Diane Sears


In the old Reese’s Peanut Butter Cups commercial, two people crash into each other and say, “You got peanut butter in my chocolate!” and “You got chocolate in my peanut butter!” With this serendipitous encounter, a new product takes off.

The AP world is seeing its own peanut butter cups moment this summer with the supplier portal, a concept that has steadily gained traction since we wrote about it in AP Matters magazine in August/September 2009. The portal is getting an unexpected boost from this year’s controversy over stiffer 1099 reporting requirements that are set to take effect Jan. 1, 2012.

A provision buried in the Patient Protection and Affordable Care Act requires organizations that purchase at least $600 in goods or services in a calendar year from a single supplier to submit a 1099 form to the IRS. It’s expected to create more paperwork for accounts payable departments – except those that handle the 1099 process by automation.

Lavante – a San Jose, Calif., company that has built its reputation on recovery auditing – launched a new supplier portal this summer called Lavante SIM, short for supplier information management. I understand clients have been especially interested in what the product can do to help them meet the new 1099 requirements – an added bonus for Lavante, which didn’t know what Congress had in store when it created the supplier portal.

I sat in on a presentation about the product in May, and I recently asked Lavante CEO Joe Flynn what makes it different. Powered by the company’s underlying communication platform, Lavante Connect, the Lavante SIM portal requests and collects supplier data and performs multiple services that AP departments can’t find together in other solutions, he says.

Sure, it’s not as tasty as chocolate and peanut butter. But it does offer vendors and buyers real-time visibility into the procure-to-pay process. Lavante SIM touts these features:

1. It drives compliance from suppliers. It automates the process of gathering information that would cost your company money, time, and resources if it were missing. Perhaps most importantly this year, with the 1099 tussle, Lavante SIM performs an automating taxpayer identification number (TIN) match to ensure quality data. In addition, it automates the process of collecting data and documents by pinging suppliers when their expiration dates are approaching. Lavante SIM also offers an out-of-the-box solution for new supplier set-up and data collection, taking note of details such as the supplier’s status as woman- or minority-owned.

2. It’s affordable. One of the biggest barriers to implementing vendor portals, Flynn says, is the cost of setting them up. Lavante SIM is a software-as-a-service (SaaS), so organizations don’t have to invest their IT time in setting it up in-house. Also, organizations can start with one or two components and add others as they go. Known for its high-yielding audits in the profit recovery space, Lavante offers a unique solution for keeping the cost of its vendor portal product low. Flynn points out, "Our recovery services unlock trapped working capital out of the supplier population that not only provides instant ROI on the project but ultimately fully funds the portal's monthly subscription."

3. It‘s scalable. Charges are based on the application’s ability to get suppliers to comply with data requests. It’s a subscription model based on the number of suppliers per month per tier.

4. It gives suppliers a break. There’s no charge for suppliers to plug into the application. Also, once their information is registered with the first customer, it’s available for any of their customers in the Lavante SIM network. In fact, other potential customers can find them through the network.

At a time when AP departments are nervous about more tax-related work on the horizon, companies will look to new solutions like this one to help them cope.

Let me know about other buzz you’re hearing out there.