Supplier onboarding can be tedious and slow. But it’s also an important process for any business that relies on external vendors. Supplier onboarding protects against compliance risk, keeps payments moving without delays, and sets the foundation for healthy, long-term supplier relationships.

Below, we’ll explain how supplier and vendor onboarding works, what it should include, and how to make it a positive experience for all parties.

What’s in this article?

• What is supplier and vendor onboarding?
  
• What are the key steps in the supplier onboarding process?
  
• What are the best practices for vendor onboarding?
  
• What is supplier onboarding automation?
  
• How do you choose the best vendor onboarding software?
  
• How Stripe Global Payouts can help
  

What is supplier and vendor onboarding?

Supplier onboarding, also called vendor onboarding, is the process of setting up a new supplier in your systems so you can start doing business with it. That involves collecting information such as tax IDs, banking details, and compliance documents, vetting the vendor, and ensuring everyone agrees on expectations and guidelines before any money or materials are exchanged. Supplier onboarding is how you confirm that the supplier can deliver what you need, that you can pay it reliably, and that there are no potential issues—financial, legal, or otherwise—that could cause problems in the future.

The process can be quick and simple or more comprehensive, depending on the supplier’s scope and risk. It takes about three months on average to complete a supplier search, and the onboarding process adds even more time. A one-time vendor might need only a basic form and payment setup, while a major supplier might need a longer review, including legal, finance, procurement, and information technology (IT).

What are the key steps in the supplier onboarding process?

Every company handles supplier onboarding a little differently, but most follow these core steps:

• You flag the need for a new supplier. Procurement or finance confirms whether the vendor is necessary, within budget, and worth bringing into the system.
  
• You vet the supplier. This might involve checking references, financial stability, or certifications. Important or high-risk vendors often go through deeper reviews here, sometimes including legal, compliance, or security input.
  
• You collect the necessary data and documents, including business details, tax forms (e.g., W-9 or local equivalent), bank account information for payments, licenses, certificates, or proof of insurance, and signed policies or codes of conduct, if required.
  
• You check the collected data. Are the tax IDs valid? Is the bank info formatted correctly? Is anything missing? This is also where risk teams might run compliance screenings (e.g., sanctions lists, ownership checks, insurance verification) before they approve the vendor to move forward.
  
• You establish a contract that dictates pricing, payment terms, deliverables, service-level agreements, and any specific legal language required by your organization.
  
• You add the vendor to your internal systems, such as enterprise resource planning (ERP), procurement, and accounts payable (AP). Payment terms are configured, vendor IDs are created, and data gets mapped to downstream tools to prevent rework or fragmentation later.
  
• For more involved partnerships, you might introduce the supplier to your tools or processes. For example, does it know how to submit invoices and acknowledge purchase orders? Whom should it contact when something breaks? For low-touch vendors, this step might not apply.
  

What are the best practices for vendor onboarding?

A great onboarding process saves time, reduces risk, and sets the tone for a successful working relationship.

Here’s how the best-run teams do it.

Use a standardized checklist

Start with a clear, consistent list of everything you need to collect and verify. This makes your process auditable and repeatable.

Prequalify vendors early

Before you ask a supplier to fill out any forms, ensure it meets your minimum requirements. Those might include certifications, geographic restrictions, diversity classifications, or industry-specific credentials.

Centralize all communications

Use a single portal, shared folder, or point of contact. Don’t scatter forms across different emails, chats, and spreadsheets. Everyone, including the vendor, should know where the process lives, what steps have been completed, and what’s still outstanding.

Assign a process owner

There should always be someone in charge of tracking the onboarding from start to finish, ensuring every step occurs at the correct time.

Automate the repetitive parts

Use software to validate tax IDs, route approvals, track submissions, and flag missing fields. This can help reduce delays, avoid manual errors, and free up your team for more valuable work.

Don’t treat every vendor the same

Customize the depth of onboarding to the risk, scope, and complexity of the vendor without compromising your controls. A freelance photographer doesn’t need the same process as a core logistics provider.

Be transparent about expectations

Clarify the details of the relationship: how the vendor should invoice you, when payments go out, and whom they should contact for different questions. Sending the vendor a “how to work with us” one-pager can help eliminate confusion.

Make a good first impression

Onboarding is your first real interaction with a supplier. If the experience is chaotic, slow, or opaque, it can reflect poorly on your future working relationship. Be responsive, ask for only what’s necessary, and keep the process moving.

What is supplier onboarding automation?

Supplier onboarding automation is the use of software to handle the manual, repetitive, and error-prone parts of onboarding. Instead of emailing PDFs back and forth and chasing missing signatures, you provide a secure digital form or portal where your vendors can submit all material. Behind the scenes, it handles validation, compliance checks, internal workflows, and system integration.

Here’s what automation can enable:

• Self-service data collection: Vendors fill out digital onboarding forms and upload documents themselves.
  
• Real-time validation: The system checks for missing fields, incorrect formats, invalid tax IDs, or mismatched payment info before submission.
  
• Workflow routing: Approvals are triggered automatically based on vendor type, spend thresholds, or risk level.
  
• Built-in compliance checks: Screenings against sanctions lists, business license verification, bank account ownership validation, and more are built in.
  
• System integration: Once a vendor is approved, its data flows directly into your ERP, procurement, or AP systems.
  
• Audit trails and visibility: Every approval, submission, and change is tracked and time-stamped.
  

Automation makes the process faster, more accurate, and more compliant. It also lets you bring more people on board without burning out your team. You don’t need a massive system to start: even small upgrades, such as switching from emailed spreadsheets to a structured online form, can minimize onboarding time and cleanup dramatically.

How do you choose the best vendor onboarding software?

The right software makes onboarding less painful for you and the vendor. You need a tool that fits the way your team works and solves the problem you’re experiencing.

Here’s what to look for.

It integrates with the systems you already use

Good software should send approved vendor data wherever it needs to go: your ERP, AP, and any other systems that make sense for your business.

It’s self-serve for vendors

The best onboarding experience is one where vendors don’t have to email a PDF, ask where to send it, then wait a week to find out it’s missing a field. A good tool gives them a clean, secure interface where they can fill out forms, upload docs, and track progress.

You can build rules into the workflow

Every company has its own approval logic—by spend, risk, or region. Your software should let you set that up without filing an IT ticket. Whether that means routing a high-risk vendor to your legal team or skipping extra approvals for a low-risk vendor, the software should reflect how your team makes decisions.

It incorporates compliance checks

You shouldn’t have to look up a vendor’s legal name to see whether it’s on a sanctions list. A strong onboarding platform handles tax ID verification, certificate tracking, and automated risk scoring so you’re not relying on memory, or a spreadsheet, to stay compliant.

It keeps everything in one place

All the forms, policies, contracts, and communications should live in one system. If someone asks six months from now, “Did we ever collect proof of insurance from this vendor?” you shouldn’t have to dig through email threads to find out.

It’s easy to use

The interface should be intuitive enough that people want to use it and simple enough that vendors don’t need guidance. Avoid anything with steep learning curves, workflows that require 20 clicks, and mystery error messages.

It scales with your business

The software should scale with you without becoming overly complex or expensive. Watch for tools that make sense only at enterprise volume or that lock core features behind an upsell.

How Stripe Global Payouts can help

Stripe Global Payouts allows you to easily pay suppliers and vendors around the world in minutes. Create recipients, send one-time or recurring payouts, and track payout success rates. Stripe Global Payouts can help you:

• Send money securely: Instantly verify third parties with Financial Connections, and reduce fraud losses with one-time password verifications for extra security.
  
• Reduce costs: Send money to 50+ countries and decrease foreign exchange costs by funding payouts in multiple currencies directly from your bank account.
  
• Save time: Automatically populate recipients’ bank details with just a username and password, and provide access to money in minutes.
  
• Integrate quickly: Go live with no-code solutions, hosted forms, or flexible application programming interfaces (APIs) that automate payout flows and reduce errors.
  

Learn more about Stripe Global Payouts, or sign up today.