After years of false starts, businesses are pushing hard to automate payments to their suppliers.
Over the next three years, according to Mastercard research accounts payable leaders plan to significantly reduce the percentage of payments they make to suppliers using checks in favor of virtual card and Automated Clearing House (ACH) payments.
The anticipated growth of electronic payments to suppliers should come as no surprise.
Compared to paper checks, virtual payments and ACH are much cheaper, faster, more accurate, more transparent, easier to reconcile and less vulnerable to fraud and compliance violations.
Against this backdrop, procurement and invoice processing solutions providers are teaming up with payments solutions providers to help their customers migrate to electronic payments. Offering electronic payments as part of their solutions suite helps procure-to-pay providers strengthen customer relationships, generate additional revenue, and add value and differentiation in a crowded marketplace.
The challenge can be that procure-to-pay solutions providers may never achieve these benefits unless the payments technology provider partnered with has a proven program for supplier onboarding.
5 Strategies To Drive Supplier Adoption
The more suppliers that can be converted to electronic payments, the bigger the benefits that buyers can reap. The question is, how can buyers convince suppliers to accept electronic payments? And how can procure-to-pay solutions providers help their customers drive this supplier adoption?
There are five proven strategies for driving successful supplier onboarding to increase adoption of electronic payments:
1. Analysis: Consider it low-hanging fruit – opportunities sitting right under a buyer’s nose to convert suppliers to electronic payments.
The problem is, buyers will likely miss these opportunities unless they perform a comprehensive analysis of their spend. And buyers will never achieve optimum results from electronic payments if they only focus their supplier onboarding efforts on the suppliers that represent the largest portion of their spend, or only on those suppliers that accept a certain payment type.
A better approach is to consider a buyer’s current relationship with each supplier, the number of payments that a buyer makes to each supplier and the average amount, how each supplier is currently paid, the payment types that each supplier accepts, and whether the supplier has requested early payment. In most cases, this is too much work for procure-to-pay solutions providers.
That’s why they should partner with an integrated payables solutions provider that is an expert in analyzing a buyer spending and identifying which suppliers already accept electronic payments as well as those who do not.
2. Planning: Ensuring optimal supplier adoption of electronic payments requires buyers to develop plans for supplier onboarding.
An effective plan should include a strategy for supplier outreach and communications, defined objectives, rules for engaging specific suppliers or types of suppliers, action items, and a timeline with milestones. Someone also needs to be responsible for tracking down the name and contact information for the person within a supplier’s organization who can make the decision to accept electronic payments.
Most procure-to-pay solutions providers will think that this sounds like more than they can handle. Therefore, it is important to lean on providers of payments solutions to deliver the supplier onboarding services that their customers need to achieve strong results.
3. Outreach: Suppliers are more likely to accept electronic payments when they clearly understand the benefits they will achieve.
That’s why it’s critical that a supplier onboarding program includes a strategy for framing the move to electronic payments in terms that appeal to suppliers.
The biggest reasons that suppliers want to migrate to electronic payments include faster payments, streamlined receivables processing, and flexible payment options as their needs change. The speed, transparency, ease-of-use, security, and environmental friendliness of virtual card payments are especially appealing to suppliers. These types of benefits should be articulated in all communications to a supplier.
But few accounts payable departments, or the procure-to-pay solutions providers who serve them, have the time or resources to contact suppliers. That’s where payments providers come in to take on the burden of selling suppliers on electronic payments.
4. Options: It’s hard for buyers to achieve optimum supplier adoption of electronic payments when they only support a single electronic payment method. The problem with this take-it-or-leave-it approach is that suppliers might leave it.
A better strategy is for procure-to-pay solutions providers to partner with an integrated payables provider that uses a single approved-invoice file to pay each supplier based on their preferences and/or the buyer’s payment rules.
5. Support: No buyer wants to put its valued supplier relationships at risk because of poor support. Similarly, suppliers want to know that they will be supported appropriately when issues involving their payments arise.
These are the reasons that procure-to-pay solutions providers should partner with an payments provider that can support the issues that will inevitably arise, including new suppliers, changes to contact information or banking accounts, changing payment preferences, new payment types, inquiries regarding payment status, and technical issues.
What’s more, the payments provider should have a strategy for regularly reviewing a buyer’s spend file to uncover opportunities for converting suppliers based on new decision-makers or revised payment terms.
Strong supplier adoption is the key to electronic payments success. The five strategies described above are proven to drive maximum results. The work involved in supplier onboarding may sound daunting to procure-to-pay solutions providers who are extending the value of their product suite. But payment solutions providers stand ready to take on these tasks and help customers – and their procure-to-pay solutions providers – achieve their desired results for electronic payments.
Want to learn more strategies for driving supplier adoption of electronic payments and partnering with a payments solution provider that offers robust supplier onboarding support? Get in touch to learn how we can help.