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Improve your businesses by speeding up payment to your suppliers

Improve your businesses by speeding up payment to your suppliers

The relationship between enterprises and their many suppliers is an important one. For enterprises, finding the suppliers that are reliable, adaptable, and transparent can be time-consuming and frustrating, so nurturing those relationships is key.

One way that enterprises can improve their supplier relations is to speed up their payments process. Currently, over $2 trillion are stuck in the payment cycles of US businesses. That money is held up due to slow approval processes and archaic billing software. If enterprise companies can unlock that money and pay their suppliers on time or early, they will have better supplier relationships and dollars will be able to flow more freely through the marketplace.

Here is some advice that companies can take to speed up their supplier payment process.


Do

Do reevaluate legacy processes

Finance plays such a key role in the vitality of any company and is often the department least likely to implement changes and experiment with innovations due to compatibility restraints and extensive approval processes. For this reason, established companies may employ finance practices that are hundreds of years old. To make sure that invoices and approvals are always taken care of in the most effective and efficient way, it would be beneficial to implement a quarterly or half-yearly review of all finance processes and software. Taking the time to reevaluate what’s working and what’s wasting precious resources like time and money may expose a variety of areas that are ripe for improvement.

Do set up repeatable processes

The key to speed is repeatability. If a task is repeatable, there is no need for an employee to recreate the process each time. For example, if a supplier is going to have identical invoices every month or every year, set up a system that recognizes a familiar invoice and effectively speeds up the approval process by flagging it as so. This will allow suppliers to get paid quickly. It will also allow your employees to spend less time constructing and approving invoices that are identical to those they’ve constructed and approved in the past.

Do move to the cloud

Moving all documents to the cloud ensures accessibility at all times, from any device and acts as a safeguard against lost paperwork. Cloud storage also means that changes made to documents, deadlines, etc. can be accessed by all team members in real-time, rather than a team lead having to email updated versions of a contract to each person individually each time.

Do make it mobile

As mentioned above, greater accessibility is key to a swift, fast-moving supplier payment system. Allow employees to access and approve supplier invoices via a secure mobile app to ensure that there is no excuse for bills to not be paid on time.


Don't

Do not forget to ask questions

There is no part of the payments cycle that shouldn’t be questioned. Each step should be evaluated and reevaluated regularly. If you are coming into an organization to work with their payments system, make sure you ask why each step in the process is the way it is. Nothing is too small or insignificant to ask about.

Do not only train one member of staff

Make sure that more than one person is capable of approving and pushing through invoices. This way, if one person leaves the company the process doesn’t have to slow down while someone else is trained. Similarly, keep more than one supplier contact on file. People change jobs rapidly these days, and it would be a shame to lose a supplier relationship just because a former contact is no longer at that job.

Do not treat new friends better than old

If you’re going to rejigger your supplier relations software and processes, don’t just implement new systems with new suppliers. It may be a time investment in the beginning to bring old suppliers into a new system, but the advantages to having all suppliers on the same process, such as less confusion and less program training for new employees, far outweigh this.

Do not be afraid to fail

Not all supplier relations tactics work for all enterprises. When researching the newest trends and technology, accept that fact that some changes will yield pushback from suppliers. To alleviate conflict, make sure that you are transparent with suppliers about why each change was made and what results you’re looking for. If you do receive pushback, open a dialogue with suppliers to find out what it was they didn’t like and why.


Summary
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When it comes to supplier relations, enterprises should always be looking for ways to make processes easier and more efficient. If those relationships are strong, enterprises will waste less time on the procurement process and more time growing their business.


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Christian LanngCEO

Christian Lanng is CEO, Chairman and co-founder of Tradeshift, with the lead responsibility of shaping strategy and vision. After his first startup at the age of 19, Christian took a position in the Danish Government where he launched its ...

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