Paying suppliers electronically can deliver value across your enterprise. But those benefits will remain out of reach without an effective plan for enrolling suppliers. Don’t leave money on the table!
How to convince suppliers to accept electronic payments
Follow these seven steps to ensure strong supplier adoption of your electronic payments program.
Step 1: Take a hard look at your suppliers.
You are sure to miss opportunities to convert suppliers to electronic payments if you only focus your adoption efforts on a small percentage of your suppliers, such as those with whom you spend a lot of money.
A better approach is to partner with an electronic payments solutions provider that can uncover opportunities to pay as many suppliers as possible electronically.
This can be determined based on your current relationship with each supplier, the number of payments you make to each supplier and their average amount, how you currently pay each supplier, the payment types that each supplier accepts, and whether the supplier has requested early payment.
Step 2: Don’t leave things to chance.
Seventy percent of organizations have a strategy in place to pay more of their suppliers electronically, according to the Institute of Finance and Management (IOFM).
An effective program for driving supplier adoption of electronic payments should include: a comprehensive outreach and communications strategy, clearly defined project objectives, rules for engaging different types of suppliers, critical action items, and a clear timeline with milestones.
If this sounds like more than your team can chew, lean on your electronic payments solutions provider to do the heavy lifting.
Step 3: Get to the right person.
Eighty percent of organizations want to increase the number of electronic payments that they receive from customers, the Remittance Coalition reports.
But tracking down the person within your supplier organization who can make the decision to accept electronic payments can be tricky. Buyers often have incomplete or incorrect contact information for decision-makers within their supplier organization.
And accounts payable staff have little time to track down this information, contact suppliers, and complete the necessary administrative tasks to convert suppliers to electronic payments. That’s why more electronic payments partners offer services to contact and register suppliers.
Step 4: Educate suppliers on the benefits of electronic payments.
Some suppliers may need to be convinced to migrate to electronic payments.
That’s why it’s imperative to pitch electronic payments in terms that will appeal to suppliers: faster payments, rich remittance data, streamlined reconciliation, and less chance of loss or stolen payments.
For instance, suppliers who accept virtual card payments identify several benefits of this type of payment, including their speed, transparency, ease-of-use, security, and environmental friendliness
Step 5: Pay suppliers the way they want to be paid.
The problem with trying to pay all your suppliers using virtual cards is that they will either accept it or they won’t. Worse, a take-it or leave-it approach to payments can jeopardize valued relationships.
A better approach is to use an electronic payments solution that accepts a single approved-invoice file and parses payments based on the preferences of each supplier and/or your payment rules.
Step 6: Don’t be left holding the bag on support.
More than three-quarters of the typical accounts payable practitioner’s time is consumed by transaction processing, IOFM finds.
That leaves little time to manage the issues that are sure to arise with paying suppliers electronically: new suppliers, changes to contact information or banking accounts, different payment preferences, new payment types, inquiries regarding payment status, payment entry, and technical issues.
How you respond to these inevitable scenarios will go a long way to dictating the success of your electronic payment efforts. Look for an electronic payments solutions provider that has the technology and staff to provide this support on your behalf.
Step 7: Never stop onboarding suppliers.
One of the biggest mistakes that buyers make when migrating to electronic payments is to make a big initial onboarding push and then … STOP!
Suppliers will inevitably change, and so will the decision-makers at their company.
That is why it’s critical that you plan to regularly review your vendor master database to identify new suppliers, new supplier contacts, and revised payment terms – all of which may open the door to new opportunities for your organization to pay suppliers electronically.
Following these seven steps will help ensure the success of your electronic payment initiatives.
Contact ACOM Solutions
Want more strategies for convincing your suppliers to accept electronic payments? Contact an ACOM Solutions to arrange a no-obligation consultation with one of our payment experts.