Solid vendor relationships are critical to every company’s ongoing operations. Keeping suppliers happy avoids breakdowns in your company’s product or service — which is vital because those breakdowns can damage your cash flow, profits, reputation, and relationships with valued customers.
There’s some fancy industry terminology for this — supplier relationship management and enablement —but we’re really discussing preserving trusting relationships with vendors and suppliers. If your AP team can set clear expectations, be consistent and timely with payments, and communicate well, they will keep these relationships intact.
They don’t have to do it all manually, though, and they shouldn’t. Consider these digital payment trends when forming any accounts payable automation policy, internal guidelines, or processes for maintaining and improving vendor/supplier relationships.
Digital payment adoption and AP Automation is growing
We are in the middle of an ongoing global supply chain crisis, and a growing number of businesses are realizing that automated, online payments can solve many supply chain pain points by making the payment process faster and more consistent.
Digital payment adoption soared during the pandemic and continues to increase. According to Mastercard, AP departments are reducing the percentage of supplier payments they make via check in favor of virtual card and ACH payments, a trend that started even before the pandemic.
Many suppliers still don’t trust digital payment methods
Digital payments may be more convenient and keep suppliers happy, but legacy check-based payment systems have been around for centuries. Many businesses still believe that check payments have superior security, even though paper checks can be forged or account information stolen.
Resistance to culture change is one of the most significant hurdles to digital payment adoption. In a recent Institute of Finance and Management webinar, a poll found that 53% of participants considered supplier resistance to be the biggest challenge to payment automation.
Many vendors fear switching to digital payment systems is too time-consuming, less secure, and likely to incur additional fees. Others have grown accustomed to traditional check payments because that is how they’ve always conducted business.
But the reality is digital payment processes increase payment security, offer greater transparency, and are at lower risk of theft than traditional payment options.
Having a conversation about digital payments
That’s why it’s so crucial for companies to have conversations with their vendors about digital payment options. Vendors do care a lot about on-time payments, but digital payments are about a lot more than timeliness. It’s about the two-way relationship between supplier and vendor. With a B2B payment processing solution that makes life easier on both sides, the relationship will not become frayed by mishaps and snafus.
According to CustomerThink, enhanced visibility into payments and reduced processing charges are two significant advantages of automated, cloud-based B2B payment solutions. Visibility can also save money and resources.
Running anywhere from $4 to $20 per check, big businesses' fees to cut physical checks are staggering. There is also the added hassle and time that vendors must spend to sign and deposit checks manually. And what happens when the “check’s in the mail” gets lost? Paper check payments are a leading fraud vehicle in North America.
Onboarding vendors to digital payments and AP Automation shouldn’t be frustrating
Nobody wants to deal with bounced checks or late payments. By switching to digital payments, businesses and vendors can preserve and improve their relationships, minimizing the chances of something going wrong with automatic receipts and invoice management.
The transition has been slow, though. According to a 2021 Ventana Research report, nearly half (45%) of finance companies lagged in technology adoption, and only 12% were considered “innovative” in their use of modern tech.
Why is it so hard to improve existing processes with better tech? Usually, it comes down to a lack of training and support. While many businesses may have a B2B payment or spend management solution (at least an ERP module), they may not be practicing best practices and properly training vendors to use their payment system.
When you’re spending countless hours cutting paper checks and answering calls from vendors about their payment status, it's nearly impossible to get everyone their payments on time, which means that many of your vendor relationships may suffer.
Paying on time, every single time, should be the goal — improving supplier relationships and opening the door to better terms and cash flow for your company.
But it’s not enough to have a “modern” B2B payment solution that includes invoicing software. That might help you manage your vendor relationships, but the goal should be to improve those relationships. Ideally, you need a B2B payments platform that makes transitioning from traditional to electronic payments seamless for vendors, especially if they’re still on the fence about it.
The right payment partner will also work with you to improve your supplier enablement strategy, helping AP teams lower costs while using less labor and ultimately giving AP teams more time to focus on strategic, high-impact work rather than manual tasks.
Finding the right B2B payment processing solution
Whether your business is just starting to automate AP or has had an automated process for years, properly managing vendor expectations and enabling digital payments is essential to improving vendor relationships.
The good news is that Emburse Pay - B2B Payments makes digital vendor payments easy to implement. Our vendor payments dashboard allows your business to manage payments with 100% visibility, speed, and security, delivering a superior experience for your suppliers that will lead to even more successful vendor relationships.
Simplify the entire accounts payable process from remittance to reconciliation. Work with your vendors to create comprehensive, data-driven payment plans that allow you to identify new opportunities for cost savings, like negotiating better payment terms and taking advantage of early payment discounts.
If you’d like to learn more about how Emburse can help your organization streamline vendor payments and improve supplier relationships, calculate the ROI of adding Emburse B2B Payments to your process by running your numbers on the Emburse ROI Calculator.