Let the buyer be aware: keep your supplier in the loop

Let's face it, there is nothing exciting about paying bills. It doesn't have the flash and sparkle of other areas of a business, but it is a vital part of the process. Paying suppliers on time can mean the difference between a seamless operation or a disjointed process that only creates frustration on the part of both supplier and buyer, not to mention the support teams.

"Even though a company's first responsibility is to the bottom line, it cannot afford to forget that suppliers are ultimately responsible for their ability to deliver revenue. It's especially important right now that companies take care of their suppliers for the supplier's benefit as well as their own," Josh Cyphers, president of Nvoicepay, told ATM Marketplace in a recent interview.

"As companies conserve cash amid difficult economic conditions, suppliers are often the ones who feel the financial strain. Payment terms get extended. Buyers seek to renegotiate contracts to optimize their process and adapt to new solutions. But often suppliers are left out of the discussion until they're presented with their marching orders," Cyphers said.

Nvoicepay specializes in payment automation for accounts payable teams and helps to create an efficient and unified workflow for B2B payments.

"From a strategic standpoint, if you're not getting payments to suppliers in a way that's conducive to their operations, they could go out of business. They might also choose to stop working with your company altogether. To them, not all customers are ideal, and as more of them abuse the 'customer is always right' notion, suppliers have to withhold the benefit of the doubt and act in self-preservation," Cyphers said.

Q: What could happen if payments are not made in a reasonable timeframe?

A: If suppliers don't get paid in the right way, it causes many nightmares for their accounts receivable team. Those nightmares can spread throughout the organization, causing stress and frustration. That frustration sometimes manifests as a conflict between buyers and suppliers. In my prior finance roles, I saw my fair share of suppliers who went to great lengths to make their dissatisfaction known, from verbally assaulting my unsuspecting colleagues to threatening lawsuits.

Q: Why let things escalate to that point?

A. When suppliers go to these lengths, it's because they're desperate for action on the buyer's part. In today's environment, their distress is twofold. Payment amounts that seem negligible to buyers make a significant difference to suppliers. The constant flow of payments from AP to AR teams has slowed as companies conserve their funds as long as possible. The ebb and flow of this process has always been present — it's how many companies do business. But this year, suppliers are feeling the strain more than usual. And when the economy struggles, finance departments often add aggressive collections specialists to their accounts receivable teams to collect overdue money from their customers, relationships aside.

When suppliers don't get paid on time, they may decide to deprioritize the offending customers. By becoming a nuisance in their process, your supply chain could feel the impact. Ultimately, this translates to your inability to generate revenue.

Q: How important is an AP team to the process?

A: In my experience, AP people are helpful, conscientious and tough. They have to be, as the liaison between their company and its suppliers. Right now, they're on the front lines, battling to conserve cash. If past downturns are any indication, they're currently bogged down with calls, and morale is dipping as the number of irate calls spikes. What's worse, that stress and emotional exhaustion can cause high turnover rates, which in turn leaves companies in a constant state of training new hires, a drain on already limited resources.

Q: So, treating suppliers well can enhance a company's success?

A. More companies seem to value their supplier relationships than not. I recently participated in a third-party study to understand what potential payment automation buyers value the most about adopting such a solution. Supplier experience took the third spot after efficiency and fraud protection.

I've experienced both positive and negative aspects of the financial battle. On the one hand, I've negotiated with large retailers who ground businesses down to the thinnest margins. Smaller companies that rely on their enterprise customers to stay afloat are often forced to accommodate them, knowing that they are expendable and replaceable.

I've worked with a global manufacturer that valued its supplier relationships and would only offer early payment discounts and supply chain financing if they knew it would benefit the supplier. This company holds stress-free, decades-long relationships.

Supplier experience appears in our buyer persona research too. When I meet with customers, they want to ensure that we treat their suppliers well. It's not only part of the company culture they wish to instill in all of their relationships, but they also worry about the impact on their AP team and the supply chain if something goes wrong. They understand any economic impact on their suppliers ultimately translates to higher prices.

Q: How does your company support suppliers?

A: Supplier experience has always been a crucial part of our value proposition as a payment automation solution, and why we continue to focus on building upon the improvements we have already implemented.

We have a dedicated team that supports suppliers on behalf of each customer. Because many customers share the same suppliers, we act as the main point of contact for all of them, which reduces the points of contact a supplier must make to resolve payment issues or update contact or financial information.

At the same time, we're flexible. Some of our customers have invested deeply in their supplier relationships, and they still prefer to be involved in communications. In those cases, we don't have to be a single point of contact. Suppliers can contact us or their customer's AP team, whichever suits them.

For suppliers with hundreds of customers in our network, which is common in verticals such as automotive, construction and technology, we even offer consolidated payments. For example, we combine all their incoming payments into one deposit and supply a data-rich file for easy reconciliation, right down to the customer and invoice level. This data is delivered either through our payment portal or by email.

Buyers have immense power over suppliers, and sometimes they press that advantage hard. However, supplier advocacy results in measurable success for all parties involved.