A surprising number of big organizations still rely on traditional paper invoicing and BACS to pay their suppliers. While this approach has some advantages, the stretching of standard payment terms – particularly in embattled sectors like construction – is causing suppliers considerable pain. At first glance, it looks like the odds are stacked against the supplier putting buyers at an advantage. The truth is that the traditional model doesn’t really benefit the buyer either.
The high volume of human and capital resources required to set up and maintain complex and admin-heavy supply chain finance processes means buyers often struggle to onboard new suppliers. This ‘process overhead’ can be so cumbersome that many buyers become resistant to change. Instead, they opt to limit their supplier choices to a small number of partners, meaning they reduce the competition for their business by working with only a tiny fraction of the overall market.
Thankfully, digital payments integration and the popularization of B2B card payments in the supply chain is enabling dramatic change. Here, buyers, acquirers and suppliers can all plug into independent stakeholder-agnostic payments platforms that offer simplicity and efficiency as fundamentals, by doing the invoicing, payment and reconciliation ‘heavy lifting’ on their behalf.
Payments integration is playing an increasingly influential role in supplier selection. This is evidenced by the sharp rise in tender documents that enquire about acceptance of card payments in general, and Level 3 purchasing cards specifically. For buying clients operating a card program, this knowledge is important when identifying fit-for-purpose merchants because it ensures that any future financial engagement between the two parties is as streamlined as possible.
To bring agility and efficiency to this process, specialist providers of integrated supply chain payments platforms have established broad networks of suppliers that they support with payments integration. This enables buyers to access a broader range of qualified suppliers with whom they can do business, freed from the headaches of financial incompatibility. As a result, the impact of these services goes far beyond enabling process and cost efficiencies. By providing buyers with access to new supplier networks, they can establish a strategic advantage over their competitors. More suppliers mean a greater talent pool from which to select best-of-breed partners and also greater competition for each piece of business they put out to tender.
In this way the digital transformation of supply chain payments is creating new value, fundamentally changing the way buyers and merchants find, evaluate and interface with one another. What was once merely transactional has now become a tool to enable the harmonization of commercial engagement, which is, in turn, enabling stronger, deeper partnerships.
What integration challenges?
Procurement and finance teams in large corporations are, understandably, nervous about any major system upgrades. When you are making hundreds or even thousands of payments every month, any downtime caused by integration issues can be damaging – creating administrative challenges for internal teams and confusion over the status of payments, as well as negatively affecting relationships with suppliers.
For independent, agnostic payments platforms, however, these kinds of teething issues were dealt with long ago. Their services are now so advanced, and the integration process so sophisticated, that it is commonly possible to start processing transactions within 24 hours of the initial contact with the supplier.
Eliminating downtime and ensuring integration with current invoicing systems are clearly crucial to the business continuance, but there is further value to the use of stakeholder-agnostic platforms when it comes to integration. By not being tied down to any one card scheme and by providing comprehensive APIs, these platforms empower developers to seamlessly implement payment processing into their existing applications.
This is significant as it creates added value for both buyers and their suppliers. By expanding payments services without disrupting the buyer’s existing infrastructure, buyers can readily experiment with new payment applications unburdened by the technical heavy lifting that commonly comes with them.
Card payments enable large parts of the payments process to be automated and streamlined, reducing administrative headaches for procurement teams. For example, Level 3 purchasing cards use electronic card management information systems. These systems receive invoices electronically, cost-allocate and then reconcile them, all without human input. This creates significant process efficiencies by freeing up internal resources – particularly for large companies regularly purchasing from many different suppliers.
Best of breed B2B payment processing platforms also provide detailed email remittances and portals accessible to buyers and suppliers 24/7. These portals include information about past and incoming payments and calculators that allow stakeholders to input their data to show the cost of payments and savings offered. Not only does this remove any uncertainty and complexity from the equation, but in today’s regulatory climate it provides an invaluable, real-time snapshot of outgoing payments.
Stakeholder agnostic payments platforms circumvent the conventional ‘process overhead’ for buyers by providing fully managed end-to-end supplier onboarding services, including bespoke microsites with detailed instructions and tailored correspondence for buyers to share with their suppliers. This ensures that merchants can be onboarded quickly, further simplifying card issuance and acceptance.
Faster, integrated payments
Ultimately, paytech products go beyond improving efficiencies and reducing costs – they create opportunity. All parties benefit from the added value accessed through the smart application of flexible technologies that bring buyers, suppliers, issuers and acquirers closer together.
And, perhaps most importantly, no-one needs ever write another invoice again.