2019 brings priority changes for many accounts payables departments, with paying suppliers electronically at the top of their agendas. According to Ardent Partners, over sixty-two percent of payments to suppliers already are made electronically.

The major operational benefits of electronic payments are well-documented; increased efficiency, reduced costs, and better accuracy and control of supplier payments.

Processing payments electronically also enable AP operations to achieve important strategic advantages – ones that extend benefits throughout the organization.

Following are just five ways that paying suppliers electronically instead of with paper checks will deliver greater value to the enterprise in 2019:

1. Capture more early payment discounts:

Rationalizing more favorable payment terms as part of an electronic payment initiative creates more opportunities to capture early payment discounts.  

Not only will suppliers be eager to accelerate to their cash flow with earlier payments, but buyers can also capture an average 2 percent discount per invoice as a result.  And the amount of these discounts can add up quickly.

Sixty-four percent of best-in-class payment operations efficiently capture early payment discounts, Ardent Partners reported.


2. Provide suppliers with an online self-service portal:

Cash flow analysis and liquidity management are primary functional priorities for CFOs in 2019, and in any year.  Unfortunately, poor or limited visibility into the status of payments makes it extremely difficult for them to effectively manage cash.  

Self-service supplier portals provide CFOs with real-time, on-demand visibility into the status of customer payments – optimum tools in helping improve their cash forecasting and planning.

This added visibility and control establishes self-service supplier portals as an invaluable tool for attracting and retaining key suppliers, and a good asset for gaining leverage during contract negotiations with them.  

Forty-six percent of best-in-class payment operations provide suppliers with a self-service portal, Ardent further shares.


3. Implement a supply chain financing program:  

Reducing DSO – a calculation of the time it takes to collect receivables is another key priority of business.  This is especially true of small and mid-sized businesses that may not have ready access to a line of credit from their banks.

Simply put, supply chain financing is set of solutions that optimize cash flow by allowing businesses to lengthen their payment terms to their suppliers while providing the option for their medium and large SME suppliers to get paid early.  

And, these faster payments to suppliers are made without impacting a buyer’s balance sheet. In addition to the improved cash flow, buyers reduce supply chain risk and typically receive a share of the fees from the third-party who finances the transaction.

Ardent Partners’ report additionally cited that twenty-seven percent of best-in-class payments operations have a supply chain finance program.


4. Provide rich remittance detail to suppliers:

Accounts receivable departments are constantly looking for ways to streamline cash application.

Providing suppliers with rich remittance detail payment can eliminate eighty-percent of the time AP spends with payment inquiries and reconciliation calls. Valuable time that can now be reallocated to much more meaningful tasks. 

Rich remittance detail also delivers great benefit to suppliers, enabling effortless posting and reconciliation for their accounts receivable operation– resulting in leverage you can gain with them at the negotiating table!  

Best of all, payments solutions such as those from ACOM are “pro-active” in this process; automating the creation and delivery of remittance detail right at time-of-payment Fifty-five percent of best-in-class payment operations provide remittance detail to their suppliers, Ardent Partners reports.     


5. Process invoices straight-through:

Manually processing invoices results in higher costs, more errors, slower cycle times, and less visibility and control across the invoice life cycle.  

Automated solutions enable organizations to approve and post more invoices straight-through, without the intervention of a human operator.

As a result, highly automated organizations can process a single invoice for less than one-quarter of what it costs their peers, even with little or no automation for processing invoices.  

Forty-six percent of best-in-class payment operations process invoices straight-through, according to Ardent Partners.

Wondering how much value your accounts payable department can deliver to the enterprise?  

Contact us today and one of our payment experts will provide you with a no-obligation analysis.

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