How to Manage Suppliers and Vendors for a Contracting Business
The short answer: Manage suppliers by keeping a single vendor list with contacts, payment terms, and lead times; issuing a purchase order for every material buy; and tracking the prices you actually pay so you catch increases and compare vendors. The goal is to always know who you buy from, what you owe, and whether your costs are creeping up. CRMb keeps suppliers, purchase orders, and received stock in one place, so vendor pricing and job materials stay connected instead of scattered across texts and receipts.
Most contracting businesses "manage" vendors from memory and a shoebox of receipts. It works until a supplier quietly raises a price 12%, an order shows up short, or you realize you have been paying two yards for the same material at different rates. Vendor management is the discipline that stops those leaks.
What supplier management actually involves
Vendor management is four ongoing tasks:
- Know who you buy from. A real list, not names in your phone, with contacts, terms, and what each vendor is good for.
- Control what you order. Every material buy tied to a purchase order and, ideally, to the job it is for.
- Track what you pay. The price history for the items you buy repeatedly, so increases are visible.
- Reconcile what arrives and what you owe. Confirm the order came in complete and the bill matches.
Get those four right and you spend less, argue less, and can cost your jobs accurately because you know the true price of every material.
Build a vendor master list
Start with one list that holds every supplier you use. For each vendor, capture the fields that actually affect your business:
| Field | Why it matters |
|---|---|
| Contact name + direct line | You need a person when an order is wrong |
| Account number | Faster ordering and returns |
| Payment terms | Net 30 vs due-on-receipt changes your cash flow |
| Lead time | Two-day vs two-week decides your schedule |
| What they are best for | Which vendor to call for which material |
| Minimum order / delivery fee | Affects whether a small order is worth it |
| Pricing notes | Contract pricing, volume breaks, discounts |
The payment terms and lead time columns are the ones that quietly run your business. A vendor on Net 30 is effectively giving you a 30-day interest-free float; a vendor who needs two weeks' notice dictates when you can schedule the job that depends on their material. Track both.
CRMb's purchasing keeps this supplier list alongside the purchase orders you send them, so a vendor's record and their order history live together. That is the difference between "I think we used them last spring" and pulling up exactly what you bought, when, and for how much.
Use a purchase order for every buy
A purchase order is a written order to a vendor, quantities, items, agreed prices, before the goods ship. It is the control that turns "some guy bought some stuff" into a documented transaction you can check against.
Why POs matter for a contractor specifically:
- They lock the price before delivery, so a vendor cannot surprise you at invoice time.
- They tie materials to a job, so the cost lands in the right place for job costing.
- They give you a document to check the delivery against, catching short shipments and wrong items.
- They stop maverick spending, the untracked buys that never make it into a job's cost.
If you have never used POs, what is a purchase order covers the basics. The workflow that saves the most time is building the PO straight from the job: you list the materials a quote needs, and those become the purchase order. CRMb can create a PO from a quote and email it to the supplier, then receive the delivery into stock against that same PO.
Track vendor pricing over time
This is where the money is. The items you buy every week, fittings, lumber, wire, mulch, bags of mix, drift in price constantly, and a small increase you do not notice compounds across a year.
Tracking pricing means recording what you paid each time you bought an item, so you can see the trend. Two things fall out of it:
- You catch increases. When a vendor's price on a staple item climbs, you see it and can push back, shop it, or reprice your own quotes to protect margin.
- You can compare vendors honestly. "Vendor A is cheaper" is a feeling; a price history is a fact. Sometimes the "expensive" vendor is cheaper once you count delivery fees and short shipments.
The clean way to hold this is average cost, the running weighted average of what you have paid for an item across all purchases. It smooths out the price swings and gives every job an honest material cost. CRMb's inventory tracks average cost per item automatically as you receive purchase orders, so your pricing history builds itself. The mechanics are worth understanding in full: average-cost inventory for job materials.
Reconcile deliveries and bills
Two checks close the loop on every order:
- Receiving. When the delivery arrives, count it against the PO. Short a box? Wrong SKU? You catch it now, at the dock, not three weeks later when the job is done and you have no leverage. Receiving against the PO also updates your stock levels so you know what is actually on hand.
- Bill matching. When the vendor's invoice comes, match it to the PO and the receiving record. The three should agree, ordered, received, billed. A mismatch is either an error in your favor to fix or an overcharge to dispute.
The final layer is matching the money that leaves your bank to the jobs it was for. CRMb's read-only bank feed lets you assign a supplier charge to a job or to overhead, so real spend feeds each job's margin, and it flags likely double-counts so a material you already logged does not get counted twice when the bank charge lands. CRMb never moves money; the bank feed is read-only and visible to owners and managers only.
When to consolidate vendors
More vendors is not better. Every additional supplier is another account, another set of terms, another price to track. Periodically ask:
- Which vendors do I use enough to earn volume or contract pricing? Consolidating spend often unlocks a better rate.
- Which vendors are here for one specialty item I could source elsewhere?
- Which vendors cause the most problems, short shipments, late deliveries, billing errors, and cost me more than their price tag suggests?
A tighter vendor list is easier to manage, gives you more buying power, and makes your pricing history cleaner. Consolidate where you can, and keep a backup supplier for anything critical so a single vendor's stockout cannot stop a job.
Frequently Asked Questions
What is the difference between a supplier and a vendor?
In practice, none, the words are used interchangeably for a business you buy goods or materials from. Some people reserve "supplier" for a source of raw materials and "vendor" for a reseller, but for a contracting business you can treat them as the same thing: the people you send purchase orders to.
How do I keep track of vendor pricing?
Record what you pay each time you buy an item, so you build a price history you can see the trend in. The cleanest method is average cost, a running weighted average across purchases, which software can track automatically as you receive orders. That history lets you catch increases and compare vendors on facts instead of gut feel.
Do small contractors really need purchase orders?
Yes, once you are buying materials for several jobs a week. A PO locks the price before delivery, ties the cost to the right job, and gives you a document to check the shipment and the bill against. Without POs, materials go untracked, jobs get costed wrong, and short shipments slip by unnoticed.
How many vendors should a contracting business use?
Enough for coverage and a backup on critical materials, but few enough to concentrate your spend and earn better pricing. Too many vendors means more accounts, more terms, and messier price tracking. Review the list periodically and consolidate spend where a volume rate is available, while keeping a second source for anything a job cannot proceed without.
How does vendor management connect to job costing?
Every material you buy is a job cost, so managing vendors and costing jobs are the same data viewed two ways. When a purchase order ties a material to a job at the price you actually paid, that cost flows straight into the job's margin. Scattered receipts break that link and make job costing a guess.
Getting started
Build your vendor list this week, contacts, terms, and lead times, and commit to a purchase order for every material buy. Then start recording what you pay so pricing history accumulates and increases stop sneaking past you.
CRMb keeps suppliers, purchase orders, received stock, and average-cost pricing in one system, and ties every material back to the job it was for. It runs on Mac, iPad, and the web. Start free and get your vendors out of the shoebox.