How to improve your supplier relationships

Successful business leaders recognize the importance of strong supplier relationships for building and growing their organizations. Even so, the payments processing component is often overlooked, potentially due to legacy systems. These dated processes require unnecessary manual labor and, worse, cause neglected relationships.

“Automated payments present an opportunity for growth. If companies have solid working relationships with suppliers, it enables them to negotiate better pricing or more favorable terms,” says Shiela Howarter, Director of Digital Payments Products at Deluxe.

As B2B suppliers have become more comfortable using instant, self-service payment platforms in their personal lives via apps like Venmo and PayPal, their expectations (and demands) for receiving business payments have also evolved. In addition to secure, frictionless payments, suppliers want options to receive payments via the method that best works for them.

“Digital connectivity has changed how everyone looks at payments,” Howarter says. “There’s an increased awareness of these B2B payment processes. Suppliers want options and payment flexibility, and they will no longer settle for what they may have accepted in the past.

3 ways efficient payments can help strengthen supplier relationships

1. More time for human relationships

A key factor in successful supplier management is resolving disputes quickly and seamlessly. Lengthy invoice disputes cause damage to supplier relationships. However, a key benefit of automated accounts payable is the ability to quickly access payment data and use it to answer customer inquiries or allow suppliers self-service access to payment status.

“You can’t avoid all disputes, but proactive management is within reach and makes a significant difference,” Howarter says. “Disputes resulting in late payments may cause financial hardship for a supplier and negatively impact potential future orders and their relationship with these companies.”

A best-in-class automated AP system provides transparent collaboration tools that allow the AP team to communicate directly with their suppliers via the AP platform, eliminating the potential for competing email threads or missed phone calls, which can further hamper the process.

Over time, building trust with suppliers by offering fast and friction-free payments can make negotiations easier and more beneficial for both parties. Maintaining and nurturing these relationships also provides support and air cover if there is an error or issue with their payments.

2. Improve supplier cash flow 

Many of the major pain points for legacy AP systems revolve around the time (and money) required by manual processing and reconciliation. Nearly a third of mid-market companies cite the time it takes for the U.S. Postal Service to deliver mail as being among the top issues they face, and 29% cite the cost of overnight shipping, according to our research. Faster payments are an invaluable benefit for suppliers focused on their cash management and liquidity.

“If suppliers are not receiving timely payments, they must find that money elsewhere, impacting their cash flow and other downstream processes,” Howarter says.

Automating each part of the AP process can significantly speed up the time it takes to get payments to suppliers and even allow a company to offer early payments to preferred suppliers in some instances.

3. Defend your business against fraud 

Along with the expense of recovery, fraud can damage supplier relationships if it results in unpaid invoices or erodes their trust in the security of your system. Automated accounts payable can help reduce fraud by limiting invoice and payment access (since processing requires fewer human touches) and putting controls in place that require sign-off for off-policy expenses.

It’s no longer feasible—nor sustainable—for companies to use manual payment processing. Automated payment processing is required in today’s marketplace for companies to maintain access to the goods and services necessary to remain relevant in the current competitive environment.