The best laid plans to upgrade AP processes simply won’t see the light if suppliers are not on board. As AP departments digitize their processes and adopt innovative solutions such as electronic invoicing and virtual payments, their strategies simply won’t unfold smoothly—or perform as well as expected—if their vendors aren’t willing to embrace new ways of working. Successfully onboarding suppliers and getting existing partners up to speed with changes, comes down to recognizing both parties’ challenges, and effectively managing the customer/vendor relationship.
What Finance Professionals are Trying to Achieve
The report Global Supplier Payment Operations Trends from AP software solution provider Tipalti, in partnership with Gatepoint Research, provides insight into the challenges faced by AP professionals today—challenges that can be best met through technology, especially for organizations focused on growth. Understanding a company’s “state of payments” is fundamental to making improvements to the supplier onboarding process, and meeting needs on both sides of the customer/vendor relationship.
Here’s what the business executives surveyed said of their organizations’ business goals within the next 12-18 months, with payments-related goals emphasized:
- Staying compliant with tax and regulatory requirements (48%)
- Streamlining/automating supplier payment processes (44%)
- Structuring AP department to scale with business growth (30%)
- Improving the payment experience for suppliers/payees (24%)
- Increasing the timeliness of payments (15%)
- Increasing the range of payment methods offered (10%)
- Increasing frequency of payments (5%)
The research analysts recommend taking a holistic approach to supplier payments in order to streamline activity and reduce friction that’s caused by manual and disjointed efforts to manage the day-to-day supplier payment processes. And these payment processes are getting more complex, as shown by these indicators:
- Number of payments sent to suppliers per month: 31% send 100-499, 21% send 500 to 999, and 24% send more than 1,000
- Time spent per week remitting payments: 67% spend 4 to 6 or more hours
- Average size of each payment: for 76% of survey respondents, average payment is more than $500
For additional insights, read Supplier Relationships Believed Central to B2B Customer Engagement.
Tips for Successful Onboarding and Enablement
When it comes to supplier onboarding, specifically, automation is key for the customer. Consider the amount of time AP departments spend signing up new supplier partners: 39% of those surveyed spend 1-3 “man hours” onboarding new payees, 10% spend 4 to 6 hours, and 12% spend more than 6 hours. When time is money—those are significant costs. And what’s more, the Aberdeen Group Report, The Value of Strategic Supplier Data Management, revealed that cost reduction and savings are number one pressure for all companies, finding that Supply Chain Leaders (as defined by their research) are over 30% more likely to have an efficient supplier data management process to accelerate supplier onboarding.
While it’s clear that most AP departments see the benefits in solving their challenges through technology solutions, that’s not always the case with their supplier counterparts. Here are tips to ensure a smoother experience:
- Be proactive. Providing vendors with advanced notice of changes (e.g. the adoption of an e-invoicing or virtual card number payment solution) demonstrates a willingness to make the initiative successful and gives both parties time to address concerns. Clear, open communications also encourages buy-in at various levels.
- Sell the “wins.” It’s equally important that AP departments position any changes to their supplier relations strategy as a win-win for their partners. Sharing the “whys” behind the decision and promoting the benefits and value to suppliers, from reduced cycle times to lower costs, is key.
- Provide training and resources. Some suppliers haven’t used much technology in their processes, so they may take longer to sway. They may be on a slower path to automation, upgrading their IT infrastructures and staff to accommodate new forms of technology. Giving them the time they need to get up to speed is critical—and giving them access to educational materials or trainings may help them move along more comfortably.
For more insights, see 5 Reasons Your Suppliers Love To Receive Virtual Payments and Promoting Virtual Cards Among Your Suppliers.