Financial Supplier Management Manual

FINANCIAL SUPPLIER MANAGEMENT MANUAL

1. Purpose & Scope

This Manual sets mandatory financial controls, procedures, and governance for selection, onboarding, payment, monitoring, and offboarding of suppliers that provide goods or services to the organization. It applies to all business units, finance, procurement, and third‑party engagement channels where the organization expends funds or incurs financial obligations.

2. Effective Date and Authority

Effective Date:

This Manual has been issued under the authority of the Finance Director and supersedes prior supplier financial procedures. Any deviation requires documented exception approved by the Finance Director and Head of Procurement.

3. Definitions

"Supplier" means any third party providing goods, services, software, or consultancy for which the organization pays or has a contractual obligation to pay. "Financial Due Diligence" means review and verification of supplier financial condition, tax status, and payment-related controls.

4. Roles and Responsibilities

Procurement: manages sourcing, supplier selection, and contracting. Finance: conducts financial due diligence, approves payment terms, processes invoices, executes payments, and maintains records. Legal: reviews contractual risk provisions and regulatory compliance. Business Owner: approves operational requirements and monitors supplier performance.

5. Supplier Onboarding Requirements

All suppliers must complete the Supplier Information Form and pass financial and compliance screening prior to receiving purchase orders or invoices.

Corporation    LLC    Partnership    Individual / Sole Proprietor

6. Financial Due Diligence and Approval Thresholds

All suppliers are subject to risk‑based financial review before approval. The following documents are required according to the approval threshold:

Estimated Annual Spend:

Required Documents:

Recent audited financial statements (where applicable)    Interim management accounts    Bank reference

Approval authority levels:

• Up to $10,000 — Business Owner approval required.
• $10,001 to $100,000 — Procurement and Finance approvals required.
• Above $100,000 — Finance Director and Head of Procurement approvals required; Legal review mandatory.

7. Risk Assessment and Categorization

Suppliers will be categorized as Low, Medium, or High risk based on financial health, jurisdiction, product criticality, and historical performance. Assign initial risk category:

Negative equity or insolvency indicators    Operates in high‑risk jurisdictions    Significant revenue concentration with single client

8. Contracting and Payment Terms

Standard payment terms are Net 30 unless Finance approves alternative terms in writing. Any vendor requesting advance payment, milestone payments, or letters of credit must be escalated for additional approval.

Late payment policy: overdue amounts shall accrue interest at the rate of unless otherwise contracted.

9. Invoice Processing and Three‑Way Match

Invoice verification requires: matching invoice to approved purchase order and receipt of goods/services (three‑way match) unless an alternative approved process is documented for recurring services.

Dispute handling: disputed invoices must be logged within five business days of receipt; payment will be withheld for the disputed portion while the remainder may be processed.

10. Payment Execution Controls

Payment authorization must follow segregation of duties: requester (business owner) cannot authorize or execute payments. Electronic payment runs require dual sign‑off per approval matrix.

ACH / Bank transfer    Wire transfer    Check    Corporate card

11. Tax Withholding and Compliance

Finance must confirm tax status and withhold applicable taxes at source where the supplier does not provide valid tax documentation. All suppliers must certify tax residency when required by law. Noncompliance will result in withholding and potential suspension of payments.

12. Recordkeeping, Retention & Audit Rights

Financial and contractual records must be retained for a minimum of seven years unless a longer statutory retention applies. The organization reserves the right to audit supplier records relevant to invoicing and payments with reasonable notice.

13. Supplier Monitoring and Performance Metrics

Monitor supplier performance against contractual KPIs including on‑time delivery, invoice accuracy, and financial stability. Escalate recurring issues to Procurement and Finance for remediation or termination consideration.

14. Non‑Compliance, Remedies, and Offboarding

Material breach of financial obligations, fraud, repeated invoice irregularities, or failure to comply with compliance checks may result in suspension, set‑off of amounts owed, termination for cause, and recovery actions. Procurement shall lead offboarding to ensure orderly transition and final account reconciliation.

15. Confidentiality and Data Protection

All supplier financial information collected under this Manual is confidential and must be protected in accordance with the organization's data protection policies. Disclosures are permitted only to those with a legitimate business need or by legal compulsion.

16. Insurance, Indemnities and Contractual Protections

Suppliers must maintain insurance and indemnities commensurate with contract value and risk profile. Contracts shall include audit rights, data protection clauses, and remedies for breach. Legal shall approve required insurance limits and indemnity language.

17. Amendments and Exceptions

Changes to this Manual require written approval by the Finance Director. Exceptions must be documented, justified, and approved by Finance and Procurement before being implemented.

Appendix A — Supplier Due Diligence Checklist

The following checklist must be completed and retained in the supplier file prior to first payment.

Completed Supplier Information Form    Valid tax documentation    Financial documents attached (if required)

Executed contract or purchase order    Bank details verified    Insurance certificate received

18. Acknowledgement of Manual Compliance

By signing below, the undersigned acknowledges responsibility to follow the controls and procedures set forth in this Manual and certifies that the information provided in relation to suppliers is complete and accurate to the best of their knowledge. Noncompliance may result in disciplinary action and supplier remedies per section 14.

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