Onboarding – It’s all about the Front, Middle and Back office Part IV

This is the last post in a series on Supplier Onboarding and we have saved the back office for last.

While many vendors are focusing on introducing automation to accelerate with supplier onboarding process (to facilitate collecting the Supplier Agreement, show things like the discount schedule and include banking data, etc.), Supplier onboarding can be a time-consuming, complex task.   Given certain regulations around Know Your Customer and the Patriot Act, some things may need to be verified.

And imagine doing that in different languages. Leading vendors offer platforms to facilitate documentation in multiple languages.

Back office functions may include the following (and more activities as well):

  • Patriot Act and KYC reporting
  • Lien searches
  • Platform support
  • Processing Inquiry
  • 24x7 Web Services, Live Personal Support Business Hours
    • Remit Advice
    • Cash Forecasting
  • IT Support Services
  • Secure File Processing

If a supplier is interested in an early payment program, the back office may have to do basic or more advanced verifications depending on the nature of the program. For example, if this is a simple early pay dynamic discounting program, it is more straightforward then if a true receivable purchase agreement is involved.

The verification process includes verifying name, DBA, address, telephone, corporate status, etc. It may also include contacting key counterparty contacts (Finance, Procurement contact) by phone and add more references from to a master file.

Then there are the public records information (liens, judgments, bankruptcies), especially if these are receivables being purchased (eg. reverse factoring programs). Upon receipt of signed documents, the back office would generate a Supplier UCC search & perform an UCC filing (note: this is for U.S. suppliers). Offshore suppliers would have different requirements.

And as Jason Busch points out

Perhaps as important as what to collect is the realization of how quickly data goes stale. Data hardening and molding is not as fast a loaf of bread, but it’s close. Not only must we think about enabling suppliers initially, but keeping this data fresh overtime. Facilities close. Employees leave. Banks change. Insurance policies lapse.

Supplier enablement for various early pay initiatives, whether they be reverse factoring , dyanamic discounting or pcard programs, can prove to be the Achilles heel of otherwise perfectly architected and engineered programs. So a detailed onboarding plan is in order, and dont forget the Front, Middle and Back office!

In addition to Spend Matters PRO research, David can provide onboarding benchmarking and diagnostic work to help organizations understand the resource requirements to onboard and to improve their onboarding infrastructure to make it more effective and more efficient. The focus is on overcoming Supplier Barriers to Adoption. Contact him directly to learn more: dgustin (at) tradefinancingmatters (dot) com

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Voices (2)

  1. David Gustin:


    Thanks for the post. A few comments

    1. What happens if someone steals my Paypal password and user name
    2. There are many utilities that have launched or are in the process of launching, covering various aspects of KYC,ranging from tracking tax evasion under US Foreign Account Tax Compliance Act (FACTA), to knowing trade counterparts under the Dodd-Frank Act. Of course there is SWIFT’s KYC registry for correspondent banking. The challenge with these massive data pool utilities are the danger of data leaking, danger of hacking, access data and change and falsify. Today banks stand or fail by their own data security. If they rely on an utility, they may loosen up internal controls.

    I’m just saying…

  2. Maksim Rokhline:

    With e-Wallets (think of PayPal) we, consumers, got the ability to save our payment credentials (think of credit card number) and never re-enter them at a check-out page. At a merchant check-out page we authenticate ourselves with a wallet and let a wallet use our payment credentials to pay for an e-commerce purchase.

    Prior to storing our payment credentials a wallet is authenticating (adjudicating) them (a wallet will submit a $0 dollar auth transaction to a card issuing bank). So, – now the info (payment credentials) is adjudicated and stored with a wallet entity.

    Think of the same process for AML/KYC. Instead of a wallet it should be a bank. I (a consumer or a business) want to make my bank a guardian of my identity. My bank is collecting my personal and business information and fully adjudicates it. That is the only application i ever complete. With my bank – an entity i trust with my money and identity! All the next 173 application forms for SCF, mortgage, P-card, hotel membership, … – i don’t fill out. I click on an AML button and my bank authenticates me and approves the request to share my personal/business info with a requestor ( a SCF program manager, a P-card issuer, a hotel, …).

    More so, – a requestor of my Identity information should not be bothered with verification, adjudication as part of AML/KYC compliance. A secure and authorized transmission of my identity information from a Trusted source (my bank) should be sufficient to comply with know your customer, Patriot Act, Bank act and other AML statues. A trusted source liable with Identity management and a secure protocol for communicating the request and response of identity information should be an adequate infrastructure for an AML (on boarding!) purpose.

    On-boarding purpose! That is to say that ongoing AML responsibility is still on a ‘requestor’. Transaction monitoring, SAR reporting, Training, Data retention, assignment of compliance officer, … – all of this is for an original identity requestor to do. (And probably share some info with an identity manager, – the bank).

    On-boarding (AML/KYC) adjudication can be so much cheaper and easier with the set up i am outlining. It can be seamless as well. Click an AML button!!! Done!!!

    (Well, – credit risks and fraud risks is still for an identity requestor to assess. But that is different from compliance risks)

    Everyone can benefit here: (a) a new, profitable and legitimate role for a bank, (b) a much easier and compliant Onboarding process for an AML ‘requestor’ and (c) great customer experience for consumer or business to apply for a service.

    There are some sporadic attempts to get this built. To be successful – i.e universal and ubiquitous – it should be a true network play. A network will need to orchestrate the value. A new AML Visa needs to be created. And everyone (banks, AML requestors, infrastructure providers, customers, …) has to derive a value out to it. Otherwise, – it is a waste of time.

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