May 4th, 2021 by Brian Erlien
Many companies today are looking for ways to strengthen vendor relationships and improve liquidity and working capital. Here are three areas to focus on and three solutions that can help you do just that.
Vender & Supplier Communication
Do you offer your vendors an easy-to-use portal where they can submit invoices and verify if invoices have been received and processed for payment? By having a supplier self-service portal, you provide vendors the ability to submit invoices in whatever format they use and view not only current invoices, but past invoices as well. In addition to a self-service portal, utilizing AI-driven automation in your invoice approval process also helps strengthen both supplier relationships and working capital performance by streamlining workflows to make payments faster. Often times vendors are reaching out because they what to know when they can expect payment. If you are unable to process invoices quickly, even if delays are due to the vendor error, it can be detrimental to your relationship. This is where a front-end AP invoicing automation solution like Esker’s can help.
Payment Distribution Strategy
Many suppliers today are willing to take an early payment discount, which essentially means that they will give you a discount if you pay faster. This is mutually beneficial, as it can help your suppliers better manage their business as well generate more revenue for your company. Your payment plan should also include how you pay your vendors.
For example, if your vendors are happy to provide their bank information, you can set them up for ACH payments. If they prefer the speed and security of a Virtual Card (V-Card), that’s even better. And should any of your suppliers still want a paper check, you can easily accommodate their request; however, companies will often add to their payment term. For example, when a customer wants a paper check and their terms are net 30, you can let them know you will cut and mail their check at net 40 instead. This gives your supplies a choice on how they would like to get paid, and if you use a tool like OnPay Solutions to handle all of your payments, it helps take the burden off of your AP Team. OnPay Solutions will even handle onboarding your vendors for you, walking them through enrollment and collecting account information, allowing them to select whichever payment method they desire. Many vendors are excited to learn that there are more secure and expedient payment options than paper checks and ACH transactions. Additional revenue can also be generated when they choose V-cards. Over 30% of vendors already prefer virtual cards over more traditional payment methods. Early payment discounts and V-cards are a great way to generate additional revenue, and providing easy-to-use communication channels and payment options can help improve supplier relationships.
Early Payment Discount
If you are paying vendors early, you will want to make sure you have the funds available. Accounts receivable tools like Esker’s Invoice Delivery and Collections Management solution can help with this greatly. This will not only allow you to not only bring in revenue faster, but also provide a more accurate forecast looking forward. With enhanced control and visibility in your receivables, you will be able to take advantage of more early payment discounts and a number of other investment opportunities with the additional funds in your treasury.
Each of these solutions on their own will certainly help your business, but when you combine all three together, it can make a dramatic impact on your business’s efficiency, vendor relationships and profitability.
Interested in learning more about how Function4 can help automate your business workflows? Visit Function4 to learn more and contact an advisor to speak with one of our specialists today!
Posted in: Automation