Each and every day we interact with new technologies that are far more advanced and complex than we could have imagined a few short years ago. With most of these changes, our experiences have become more efficient, faster and more secure. 

The same cannot be said for business payments. As supply chains and payments technology have evolved, not all businesses have been able to simplify their processes and gain the most efficiencies. Companies often have hundreds or even thousands of suppliers as part of their supply chain, all of whom likely have different preferred payment methods and payment terms. Left unchecked over time, that leads to considerable waste and inefficiency in payment processes, and may be putting your business in the risky position of holding a large amount of bank account information for those suppliers. 

It’s no longer possible to just live with that complexity. The need to make an array of business-to-business and business-to-consumer payments has made the average supply chain more like a supply web. Paying those suppliers and consumers swiftly and securely, particularly in the midst of the ongoing business continuity challenges posed by COVID-19, makes checks and manual processes a nightmare.

There are several ways the current moment has made it clear that the way we approach supply-chain payments must change. Let’s take a look at those, as well as the straightforward (if not always easy) changes your business can make to bring back simpler, more efficient days.

Fraud Is Rising, Efficiency Isn’t

We have to start with check payments, because the Association of Finance Professionals reported this past year that close to 50% of payments are still made by check. These payments have always been susceptible to fraud and relatively slow, and juggling the check stuffing means using a lot of hours for your finance team that could be better spent on projects that matter. While checks have gotten more secure over time with newer technology, they remain slow and prone to fraud. 

For businesses with global payment needs, relying on checks is completely out of the question. Traditional methods of making international payments are slow, costly and lack the timeliness that is needed when sending money around the globe, especially in today’s climate. 

If that was the sole problem with check payments, you might be able to grit your teeth and get through it a while longer. Unfortunately, the pandemic has made even sophisticated AP departments reckon with business continuity challenges made worse by manual processes and paper. For example, higher education organizations have already grappled with a summer where employees have been remote and may need to be again in the fall or winter due to COVID outbreaks, making the need for automation and remote access evident. 

The widespread shift to remote processes has also led to a sharp increase in fraud, with the Federal Trade Commission reporting $13.4 million in U.S. business losses due to COVID-19 this year. In just the first quarter of 2020, before the pandemic shut down offices nationwide, PYMNTS.com reported that businesses made 33% more ransomware payments, a number that has surely risen further. 

Adding to the troubles, U.S. mail has been marred by slowdowns, and even small delays in the expected arrival of a check can have a significant impact on your supplier partners. Over time and with multiple payments, that can create friction between your organization and theirs, and prove to be aggravating for both your AP function and their AR department. 

Per Ardent Partners, 60% of AP departments say the length of time it takes to secure approvals for invoices and payments is the top challenge they’re facing in 2020 and beyond, which adds another layer of complexity and frustration to the process of paying suppliers. That’s especially relevant for smaller businesses with large, complex supply chains, like family-owned manufacturers or real estate firms, who might not have the staff or the infrastructure today to break free of slow, manual processes. 

When you add security, manual processes, and the shift to remote work to existing inefficiency, the challenges to paying your supply chain effectively and keeping suppliers happy becomes obvious. Suppliers 

How to Reduce Complexity and Fraud Risk

That’s the scope of the problem. Now the question is simply how you solve it.

Fortunately, that’s less daunting than it seems. For most businesses, streamlining supply-chain payments while making them more efficient and secure can be accomplished in four ways, all of which build on one another. Let’s outline those now. 

• Streamline key functions with digital processes. This is the perfect time to be ruthless when it comes to finding efficiencies in your payment processes. If you’re switching to digital payments and working on your payment security, you’re going to free up time for your staff to concentrate on big picture items. One of those big picture items can be further streamlining your payments, as simply getting checks out of your payment mix is a game changer, particularly for manufacturers, health care providers, and other verticals with massive supply chains. 

One of the best ways to do this is by auditing your supplier universe and ensuring you know who you make payments to most frequently, how large those payments typically are, and how they’re being paid. That can help you prioritize who you should be onboarding for virtual card and ACH, where your staff should intervene to preserve supplier relationships, and even where you might consider making changes to which suppliers you’re utilizing. It takes time to convert a large supply chain to digital payments, but it’s worth the effort for both your business and your suppliers.

• Prioritize supplier relationships. Put yourselves in the shoes of a supplier who emails you an invoice, has no visibility into when that invoice is getting approved, and then finds themselves waiting for a long time to receive a check. In that scenario, your AP department is more of a nuisance they have to deal with than a strategic partner, and your relationship with that supplier can suffer.

Providing a way to track the status of their invoice, ideally through a secure digital portal, can work wonders. Providing secure, digital payments with enhanced remittance info and payment history details makes cash application easier and improves your standing with your partner further. Better payment experiences equates to better supplier relationships, especially for smaller businesses who are likely extremely reliant on being paid on time. 

• Enhance security processes and technology. If you’re holding supplier bank account details, your potential exposure to fraud is significant. If you are clinging to processes that have served you well for decades but are ill-suited for the moment, you are embracing risk in a way no business should be. If your staff isn’t properly trained on what to do if they receive a suspicious payment request while remote, that’s a potentially massive problem.

Finding a payment network with robust security is an excellent first step, since it can remove both the risk of holding those bank account details and some of the risk associated with staff making mistakes. The switch to digital payments that hopefully comes with that will remove some of the traditional fraud risks associated with check payments, but you’ll still want to institute protective measures like Multi-Factor Authentication on your accounts and train staff on best practices, including Googling to ensure the phone number requesting a banking account change is the phone number for your supplier. 

• Find the right solution. Ultimately, unless you have the resources to build your own AP solution from scratch, you’ll need to find a partner who can enable these kinds of changes for you. Look for one who focuses on automation through digital payments, boasts robust payment security protocols and tech, and can explain to you clearly and concisely how partnering with them will allow you to streamline and simplify your supply-chain payments. You’ll want to ensure that solution integrates seamlessly with your ERP and existing bank relationships to avoid additional work and headaches. 

We’re never going back to handing payments back and forth to suppliers, but the complexity that has defined supply-chain payments for decades can still be eliminated. Better automation, better security, and better visibility can get you there, and there’s no time like the present to make a change. 

Bill Wardwell is senior vice president of strategy, product and business operations at Bottomline Technologies.