Six Ways to Use AP and Payment Automation to Improve Supplier Relationships
Positive supplier relationships are the lifeblood of many businesses, helping them meet or exceed their customers’ expectations. From onboarding to developing a solid relationship based on trust, supplier relationship management is crucial to creating profitable business connections.
In a hectic B2B environment based on relationships with many suppliers, it becomes challenging to keep track of supplier updates. Discover six ways to use AP and payment automation to improve supplier relationships and gain a strategic advantage in a competitive international marketplace.
1. Ease of Onboarding
Onboarding is a labor-intensive process, requiring vendor research, analysis of products and services, and consideration of how these factors may benefit a business and its customers. Implementing AP and payment processing systems helps corporate leaders understand cash flow and management concerns on behalf of their potential suppliers. From corporate ownership to credit history and past performance, key factors are at management’s fingertips.
According to PYMNTS’ Payables Friction Playbook, 64 percent of the accounts payable industry leaders feel greater data access and financial intelligence will shed light on operational insights and increase strategic capabilities. With automation, scrutiny goes deeper to ensure companies are not associated with any type of fraud or inappropriate financial actions and compliant with all applicable regulations. Getting to know vendors before forging a bond is crucial to ensure they are suitable strategic partners and seamlessly ease through the procurement process.
2. Expectation Management
Once a supplier is on board, all stakeholders should have a meeting of the minds about the agreement's details. Both teams should be clear about expectations, including deliverables, key performance indicators (KPIs), and handling routine communications. With AP and payment automation, updates are available to everyone in real-time, helping to keep the supply process on track.
Systematic status updates ensure constant communication between all contact points to prevent confusion or misunderstandings that could become costly. Delays and bottlenecks are easily recognizable and can be instantly addressed. Staying on top of the status helps companies avoid problems, such as supply interruptions, while protecting their supplier relationships and business reputation.
3. Relationship Building
Once viable suppliers are onboarded and have a working agreement with the company, relationship building begins. Once a back-office function, AP and payments automation have brought the AP team to the forefront of operations and made them vital to the C-suite. Manual processes hold companies back and can damage vendor relationships, especially as automation takes the forefront at businesses around the globe.
Onboarding, credit information, and contract terms are manageable via AP and payment automation, rather than tedious and time-consuming manual processes. A central zone for master data, including invoicing and order and payment history, streamlines operations and helps prevent late payments. After making regular payments on time, AP professionals can negotiate money-saving discounts with suppliers for early payment or loyalty, helping to reduce costs and increase profits.
4. Improved Communication
Communication is key to developing productive and profitable supplier relationships. Effective communicating begins in-house with interdepartmental communication in real-time, regardless of location or device. Documents, data, and invoicing updates are instantly accessible to everyone, from AP clerks to the C-suite. As a result, supplier relationships can be gauged based on actual performance and costs rather than manual research and speculation.
With more control over cash flow and partner activity, companies make well-informed decisions about suppliers. Top vendors stand out based on real-time data, so companies focus on supplier relationship management with the right strategic partners. Finding suitable suppliers helps businesses stand out from the competition as a trusted brand that delivers what customers want.
5. Timely Payment
The wisest way to improve supplier relationships is paying on time - or early. Making timely payments makes a business credible and honest to vendors, building solid collaborations built on trust and mutual respect. As a result, the AP team is in a viable positive to negotiate discounts on products and services and discounts for early payments.
Research reveals a mere five percent of businesses consistently make timely payments. Reasons may include inaccessibility to the latest data due to outdated manual practices. Implementing AP and payment automation helps alleviate issues that lead to late payments. In addition, making payments on time, all the time, ensures companies are viewed as honest and reliable corporate partners - which helps when the AP team is ready to negotiate money-saving discounts for loyalty and early payments.
6. Visibility and Credibility
Vetting new suppliers takes time and effort, and important partners could require extensive research and governance. Monitoring data in real-time helps mitigate supplier risk. In addition, companies that are more visible to suppliers gain a competitive advantage. The 2020 Deloitte CPO Flash Survey found organizations thriving since the COVID-19 pandemic were twice as likely to prioritize automation in daily operations and seven times more likely to expand their supplier bases to reduce potential interruptions and vulnerabilities. With that in mind, supplier relationship management is expected to become increasingly important in 2021 as businesses emerge from quarantine to open their doors for operation.
Supplier contracts and amendments, certifications, invoices, and payments, and performance are all accessible in real-time to stay ahead of the curve and make swift changes if needed. Collaboration is possible in the cloud, regardless of location and time, which was a huge advantage for businesses working remotely during the quarantine. With AP and payment automation, companies are ready for any type of natural disaster or pandemic.
After the challenges businesses faced during COVID-19, AP and payment automation and supplier relationship management are two top priorities to remain competitive and profitable. Automated processes save time, money, and human resources from access to real-time data to cloud collaboration. Companies that fail to adopt these strategies post-pandemic are likely to get left behind.
