Speeding up Supplier B2b Payments
If you want a healthy and innovative supply chain, you must streamline your invoice approval process to pay sellers promptly. You do this by changing processes and systems, educating your suppliers, creating flexibility in your payment methods, enhancing your internal and external communication, and dealing with any issues proactively.
There are many financial benefits to paying your suppliers promptly. Most businesses acknowledge the advantages of a steadier cash flow and recognize the value using early payment solutions creates. But the fact is, even when companies want to pay sellers early, there are barriers such as broken processes, legacy technology, and complex organizational structures that hold them back. Overcoming these hurdles helps both parties create more resilient and efficient operations.
Given the above challenges, even the best-intentioned businesses struggle to pay their sellers promptly. However, we’ve outlined some things you can do to speed up the payment process.
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Improve your systems and processes
Often, businesses struggle to pay sellers on time due to outdated and unreliable technology. An outdated payment system leads to broken processes, which delays the payment cycle. This means that even if a business wants to pay its sellers promptly or ahead of schedule, it cannot due to the long time it takes to receive and process invoices.
To solve this, companies need to prioritize digitization. This doesn’t mean merely using tools to digitize your current processes but rather transforming your existing operations to function within a digital format. While using digital tools alongside your traditional methods may work as a band-aid and drive short-term benefits, the chances are your company will still face hurdles and inefficiencies in your operations. If you want impactful change, you need to rethink your processes and harness the new generation of networked platforms. Doing this will help you create clear, efficient, and effective methods to ensure you pay invoices promptly.
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Education
Buyers always get the blame for late supplier payments, but it’s not always their fault. Sometimes, sellers are guilty of sending invoices to large companies without proper attention and care. As a result, invoices can get lost in the system, be easily overlooked, and therefore go unprocessed or unpaid.
Overcoming this barrier can be difficult, but it isn’t impossible. One thing buyers can do to help rectify this problem is educating their sellers. Buyers should provide clear information to their suppliers that dictates where to send invoices, what information is necessary to include, and how invoices should be formatted. Also, buyers should embrace e-invoicing and encourage their sellers to use e-invoicing strategies wherever possible. These solutions take on much of the hard work for sellers, providing them the best opportunity of getting paid quickly.
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Resolution
When it comes to business and finances, there will always be some disputes. Not all conflicts can or should be avoided, but they need to be handled efficiently and respectfully when they arise. Sometimes, suppliers might not be aware that a problem exists. That’s why the first step towards conflict resolution is to have an honest and transparent discussion with both involved parties. Make sure to take notes during these conversations for accurate record keeping. Then, try to find a solution or agreement that works for both parties. Remember, the best thing you can do is be proactive. By looking ahead and having these difficult conversations before a problem gets out f hand, you can reduce the strain on your business relationships and continue your operations as usual.
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Flexibility
We all know how quickly things can change in the business world. And, when it comes to supply chain relationships, they are constantly evolving due to their dynamic nature. Yet with payments, many businesses stick to a tried and tested formula that doesn’t adapt alongside their business operations or appreciate the relationship’s needs. This is when troubles arise.
Businesses that lead the pack are the ones creating flexibility in their payment strategies. Organizations can help solve the disconnect between their changing needs and traditional payment methods by having an adaptable approach to seller payment solutions.
One example of a flexible approach that many businesses have seen success with is leveraging purchasing cards for smaller transactions. This method ensures sellers are paid quickly and efficiently, and they can do so without using their own capital. For more significant business transactions, organizations are relying on supplier financing tools for added financial support. These tools give sellers the option to accelerate payment so that they can meet their cash flow needs. This often is backed by a discounted rate on goods purchased or an extension of working capital for the buyer.
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Communication
Clear communication is the key to success in any organization. When it comes to B2B payments, this is no exception. Buyers and sellers need to engage in frequent and honest communication. Both parties should have an understanding of expectations and where they are at in the payment cycle. Take time to highlight any issues proactively, and look to find solutions quickly. One way to do this is by arranging a monthly catch-up with sellers. These consistent check-ins will provide the platform you need to discuss potential issues. Another way to enhance communication is by using modern solutions that are built with collaboration at their core.
Getting it right
Focusing on these areas and driving improvements will go a long way to helping your company process invoices faster and pay your sellers promptly. And when you do, you’ll open up a host of strategic opportunities to better manage your supply chain and your cash.
For more advice on how to speed up B2B payments, reach out to our team of experts and see how you can Engage your sellers and grant them access to the cash flow they need.
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