A vendor tracking system sounds like it should monitor what your suppliers are doing, and for a small business it should do nothing of the kind. What needs tracking is five fields that change rarely and cost money when they are missed: the contract's renewal and notice dates, document expiry, the onboarding stage reached, and whether this supplier is actually approved.
Tracking means dates, not activity
Vendor tracking sounds like monitoring what a supplier is doing and almost never is. What a small business needs tracked are dates and states: when the contract renews, when notice is due, when the insurance certificate expires, what stage of onboarding the supplier reached, and whether it is currently approved. Those five change rarely and matter enormously.
The reconciliation that finds what you are not tracking
Once a year, export twelve months of payees from the accounting system and compare it to the vendor list. Anything paid that is not on the list is a supplier nobody approved and nobody is tracking. This single reconciliation is usually the most informative hour of the year and it needs no software at all.
One owner per supplier, or tracking is nobody's job
A tracked date with no owner is a date that expires on schedule. Every supplier needs a person who would notice if it stopped answering, and the alert has to reach that person rather than a shared mailbox. The suppliers that go wrong are the utility, the software renewal and the annual service contract that everyone assumed somebody else was watching.
Questions people ask about vendor tracking system
What should we actually track about a vendor?
Contract renewal and notice dates, document expiry dates, onboarding stage, approval status and the relationship owner. Five fields, rarely changing, and between them they answer almost every question that gets asked.
Can we track vendors in a spreadsheet?
Yes, until a date needs to warn somebody or the person who built the sheet is not there. Those are the two things a spreadsheet cannot do and they are the two reasons businesses eventually move.
How do we find suppliers we are not tracking?
Reconcile a twelve-month payee export against your vendor list once a year. Everything paid that is not on the list is a supplier that was never approved and is not being tracked by anyone.