Nonprofit Vendor Management: Track Payments & 1099s in One Platform
It's January. Your accountant needs 1099 data. You're digging through bank statements, searching emails for tax IDs, and manually adding up payments to figure out which vendors crossed the $600 threshold. Sound familiar?
Vendor management software keeps you from ever doing that again. When your vendor profiles live inside your fund accounting system, every expense is automatically linked to a vendor, expenditure totals update in real time, and 1099 preparation becomes a quick export instead of a week-long scavenger hunt.
Why Vendor Management Matters for Nonprofits
1099 Compliance
Nonprofits must issue IRS Form 1099-NEC to unincorporated vendors paid $600 or more during the tax year. Without organized vendor records and tax IDs, year-end tax preparation becomes a time-consuming scramble through bank statements and receipt files.
Fund Accountability
When donors give restricted funds, every dollar spent must be tracked and reported. Vendor payments need to be assigned to the correct fund so your financial statements accurately reflect how restricted funds were used.
Audit Readiness
Your auditor will ask to see vendor documentation — who you paid, how much, for what, and whether payments were properly approved. Organized vendor records with complete expenditure history make that conversation straightforward.
Cash Flow Management
Knowing vendor payment terms (Net 30, Net 60, Due on Receipt) helps your finance team manage cash flow and avoid late payments that strain vendor relationships or trigger penalties.
What to Look for in Vendor Management Software
Vendor Profiles
Detailed profiles for every vendor: company name, contact person, email, phone, website, and notes. Track vendor status (Active/Inactive) to keep your vendor list clean.
Tax ID Storage
Securely store vendor tax IDs (EIN or SSN) for 1099 preparation. Your software should make it easy to see which vendors need 1099s based on their payment totals.
Payment Terms
Set payment terms for each vendor: Due on Receipt, Net 30, or Net 60. Track outstanding balances and due dates so nothing falls through the cracks.
Expenditure History
View every payment made to each vendor with running totals. Click any transaction to see the full expense record with receipts, fund assignment, and approval history.
Accounting Integration
The most critical feature: vendor data should connect directly to your general ledger, expense manager, and journal entries. When you create an expense, search and link a vendor in one step.
Bills Manager
For nonprofits using accrual accounting, a bills manager tracks vendor invoices from receipt through payment. Automatic journal entries for bill posting and payment keep your books accurate.
How Nonprofits Typically Handle Vendors (and Why It Fails)
The Spreadsheet Approach
Most small nonprofits track vendors in a spreadsheet — vendor name, contact info, maybe a tax ID column. At year-end, someone manually calculates totals from bank statements to determine 1099 eligibility.
Problems: No connection to expenses, manual total calculations, tax IDs stored insecurely, no audit trail, easy to miss vendors who crossed the $600 threshold.
The QuickBooks Approach
QuickBooks has basic vendor tracking, but it wasn't built for nonprofits. It lacks true fund accounting, doesn't track restricted fund assignments for vendor payments, and doesn't integrate with donor CRM or volunteer management.
Problems: No fund accounting (uses "classes" as a workaround), no donor or volunteer management, vendor payments can't be tracked by restricted fund, separate system from everything else.
The All-in-One Approach
Purpose-built nonprofit software like Alignmint integrates vendor management directly into fund accounting. Every vendor payment is assigned to the correct fund and account, expenditure totals update automatically, and 1099 data is always current.
Benefits: Connected to fund accounting, automatic expenditure totals, proper restricted fund tracking, integrated with expenses and journal entries, one system for everything.
How Alignmint Handles Vendor Management
We built the Vendors CRM into the People Hub alongside your volunteer and contact management:
- Vendor Profiles — Company name, contact person, email, phone, website, status, and notes
- Tax ID Storage — EIN or SSN for 1099 reporting
- Payment Terms — Due on Receipt, Net 30, Net 60
- Expenditure History — Every payment with automatic running totals
- VendorSearch — Search and link vendors when creating expenses or journal entries
- Clickable Drill-Down — Click any expenditure row to navigate to the full expense record
- Bills Manager — Track vendor invoices from receipt through payment (accrual accounting)
- Fund Assignment — Every vendor payment assigned to the correct fund (restricted, unrestricted, temporarily restricted)
- Fiscal Sponsor Support — Each organization's vendor data stays completely separate, with consolidated reporting across all entities
The VendorSearch Workflow
When you create an expense in Alignmint:
- Start typing the vendor name in the Vendor field
- VendorSearch shows matching vendors from your CRM
- Select the vendor — their profile is linked to the expense
- The expense amount is added to the vendor's expenditure total automatically
- At year-end, export vendor expenditure totals for 1099 preparation
No manual calculations. No spreadsheet reconciliation. No missing vendors.
1099 Preparation Made Simple
At year-end, Alignmint gives you everything you need for 1099-NEC filing:
- Filter vendors by expenditure total ($600+ threshold)
- Verify tax IDs are on file for each qualifying vendor
- Export the data your accountant needs: vendor name, tax ID, total payments
- Hand off to your tax preparer or file through your 1099 filing service
The entire process takes minutes instead of hours because vendor data has been accumulating accurately all year.
The Bottom Line
Vendor management is one of those tasks that seems simple until January, when you're searching through a year's worth of bank statements to figure out who needs a 1099. The solution is straightforward: track vendors in the same system as your accounting, link every expense to a vendor profile, and let expenditure totals calculate automatically.
Ready to stop scrambling in January? We include the Vendors CRM on every plan, including the free Starter plan.
Schedule Your Free Setup | Explore Features
Related reading:
Ready to see how Alignmint works for your nonprofit?
Schedule a free walkthrough — we'll set everything up for you.