Improving the supplier payment process can deliver tangible financial gains as well as business-enhancing goodwill.
Have you any idea how hard it is to do business with you? It’s not a rhetorical question. Relationships can sometimes benefit from a frank airing of grievances, and relationships with suppliers are no exception.
Senior procurement professionals often cite instances when a supplier, once given the opportunity, has offered valuable lessons in business. Suppliers won’t go out of their way to tell you what’s bothering them, as they want your business too much. But businesses that open up channels of communication with suppliers are often surprised by what they can learn.
Until recently, taking this strategic or collaborative approach to suppliers might have applied to only to big business, but now those responsible for purchasing in smaller firms can also benefit. One of the most important lessons is about the time suppliers waste chasing invoices and ensuring correct payment. This is dead time to them, but why should you care?
Time wasted by suppliers is money wasted for you
You should care because every minute wasted for a supplier could be used to save you money or add value to the service you receive. This is why accounts payable is so important. Granted it’s not the sexiest of topics, but if it’s done right you save time matching invoices to orders and correcting badly submitted invoices. If a query comes in from a supplier, you can have the answer at your fingertips or better still, at the supplier’s own finger through self-service invoice status portals. And that good service can deliver tangible results in the form of early payment discounts and other cost benefits.
A cloud-based accounts payable system can enable companies of any size to iron out inefficiencies in the payables process, saving 40-60% in purchase-to-pay process costs *). But that’s not the whole story. For your suppliers, it also reduces the cost and effort of doing business with you. They don’t spend time tracking down invoices and don’t have to re-submit an invoice if it is lost. Critically, they also have a better idea of when they’re going to get their money, giving them the confidence to fuel their own service improvements and growth strategies.
That’s a big deal. In an uncertain economy cash is king. Working efficiently with your suppliers doesn’t just benefit you; it can create a very special and rare business commodity: goodwill.
The business value of supplier goodwill
Goodwill is a funny thing. It can appear on a balance sheet, but it’s difficult to define. Once you have your suppliers’ goodwill, though, it is possible to open up new and interesting conversations that were not possible when they were frustrated with the day-to-day tedium of working with your business.
In short, suppliers see things you do not see and can teach you a lot, but only if you have a bedrock of efficient, reliable processes to underpin the relationship.
Cloud computing makes sophisticated accounts payable systems available to all sizes of business, with no capital investment. By using these systems to support new processes, growing businesses can take frustration and cost out of doing business, both for buyers and for suppliers.
From there you can start to build trust which can unlock advantages for your business. In the current economic climate, it might just be your secret weapon.
*) Source Basware InvoiveReady factsheet