Three years after the height of the pandemic, dependable supplier relationships remain a key priority for businesses. While there are many factors impacting the health of these relationships, the speed and efficiency with which suppliers get paid continues to play a leading role. 

In a recent survey of North American finance leaders, 66% of the respondents agreed or strongly agreed that their supplier relationships had grown in importance. In the same survey, suppliers ranked speed of payment as their top priority in the payment experience, followed closely by accurate payment, and, to a lesser degree, payment acceptance costs. 

While the need here is clearly defined, responding to it is less straightforward for over-burdened finance and accounts payable (AP) teams. Already weighed down by manual AP processes and vendor payment inquiries, these teams are also being asked by senior management to prioritize cash flow, reduce AP processing costs, and navigate hybrid staffing arrangements and lingering hiring challenges. 

Despite these challenges, there are practical steps finance teams can take to streamline their payment processes and meet suppliers’ desire for faster, more accurate payments while also reducing their own operational costs and gaining greater control over cash flow. 

Expand the Use of Digital Payments

With paper-based checks, it is difficult for AP to know exactly when payments will clear, not only impeding cash flow planning but also leading to late payments and associated fees. Conversely, direct-debit digital payments give finance leaders greater predictability over cash flow. AP teams can time the withdrawal of funds for payment within 24-48 hours, depending on the method used, and have access to their cash until that time — an important advantage, especially in times of economic uncertainty. The great majority of suppliers also want to receive digital payments, including wire, ACH, and virtual cards. One key reason is they believe they are more likely to get paid on time. 

Adopt Automation More Broadly Across AP

AP automation has become the norm, and will continue to expand as lean teams struggle to process growing volumes of invoices and payments with limited resources. When companies automate AP, it is easier for them to pay digitally, and the synergies they achieve across the entire invoice-to-pay process compound the benefits they receive — the ability to do more with less; faster, more timely payments; greater visibility and control over cash flow; reduced costs; and better protection against fraud. 

Opportunities abound here for most finance teams. Very few teams have fully automated their AP processes. 

Put Virtual Cards to Use

Virtual cards are attractive to finance leaders because they provide cash-back rebates with every purchase. Additionally, they give suppliers almost immediate access to funds after the payment is processed, which is faster than ACH. When implemented alongside automation software with segregation of duties and proper controls, virtual cards also offer greater protection against fraud. The 2023 AFP Payments Fraud and Control Report found that attempted or actual fraud was committed against 65% of companies over the past year, with checks the leading payment method impacted (66%). By contrast, only 9% of fraud was associated with virtual cards. 

Take Advantage of White-Glove Payment Services

Nearly half of AP teams report spending more than six hours per month following up on vendor inquiries. Suppliers are also unhappy with the time it takes to follow up on invoice status, and it remains their top pain point in the customer payment process. Other key concerns include reconciling payments and cash application. 

AP automation, coupled with white-glove payment services, can remove the burden of contacting and enrolling vendors for virtual card payments while maximizing  the number of suppliers accepting virtual card payments through ongoing outreach, proxy payments via phone/online portal, and continuous enrollment campaigns. White-glove payment services also improve supplier relationships by addressing their payment inquiries quickly and effectively — and providing the human touch they are looking for. 

Embrace AP Analytics

AP automation provides a wealth of data and analytics to help AP teams gain greater control over spend by analyzing invoice and payment data. These analytics provide easy-to-digest insights into important metrics such as typical payment times, days payable outstanding (DPO), and spend-per-supplier. By tracking these metrics, AP teams can determine which suppliers are most strategic for their business, uncover ways to reduce spend by consolidating suppliers, take better advantage of volume or early payment discounts, and time payments to maximize cash flow. 

Some AP automation solutions have built-in analytics capabilities with convenient dashboards to provide critical information at a glance. This approach eliminates the need for AP team members to run time-consuming reports and stare at spreadsheets, leaving them free to focus on less tedious, more strategic tasks. 

The last few years have continued to reinforce the value of dependable supplier relationships, and timely payments are an important ingredient to the success of those relationships. By automating their AP processes and embracing digital payments, businesses can significantly increase their control over supplier payments while reducing operating costs and gaining valuable insights to make their finance function more effective. 

Anik Jain is senior product marketing manager at MineralTree.