There is little mystery to why electronic payments are a top priority of CFOs. Paying suppliers electronically delivers enormous operational, working capital and spend management benefits. But sorting through all the providers and approaches to electronic payments can be puzzling.
Electronic Payment Strategies
Eliminate the unknown by following the strategies below for evaluating solutions providers:
1. The most successful electronic payments initiatives strive to digitize all payments to suppliers. This means that prospective solutions providers must support all payment types, including card, Automated Clearing House (ACH), wire transfer, global and, yes, check.
2. The last thing any payables department needs is another standalone solution. But that’s what you will get if you work with a solutions provider that offers so-called point solutions designed for one payment type (think: multiple payment files and portals to manage). Be sure prospective providers offer an integrated platform for the full range of payment types.
3. Chances are, your finance team is too busy to manage supplier adoption. Look for solutions providers that deliver the services and expertise to achieve optimum supplier adoption, including analysis of your supplier database, segmentation of your suppliers, development of supplier communications, education of corporate stakeholders, updating of supplier master database information, supplier outreach, and support of suppliers on an ongoing basis.
4. Paying suppliers too early is akin to offering free financing. Look for solutions providers that offer card programs that extend your Days Payable Outstanding without requiring changes to payment terms. Extending DPO frees up the cash CFOs need to pay down debt, make capital investments, increase research and development (R&D), or raise dividends for shareholders.
5. Many suppliers offer discounts on the invoice-due amount in exchange for early payment. This provides buyers with an opportunity to earn big discounts on targeted spending with low risk, as funds have already been committed through the procurement process. Learn what capabilities prospective payments platforms offer to help you capture more discounts.
6. You have a lot of money invested in your ERP or accounting system. That’s why it makes no sense to work with an electronic payments solution that cannot integrate seamlessly with your legacy systems. Look for prospective solutions providers that allow you to seamlessly upload an approved invoice file from your ERP to their payment platform for processing.
7. Electronic payments are evolving at a dizzying rate. Be sure that prospective partners have a track record of innovation and product roadmap that will support changing business needs.
8. Soaring demand for electronic payments solutions is attracting a lot of start-ups. You cannot afford the risks of working with a fly-by-night solutions provider. Ask prospective partners how many accounts payable departments they serve, and the number of transactions they process annually (and the associated spend). Also, be sure to speak with references.
9. Does your business purchase a lot of goods from overseas suppliers? If so, ensure that prospective solutions can onboard these suppliers and support global payment types.
10. U.S. businesses approximately 5 percent of their revenues annually to fraud. Stem your losses by working with a solutions provider that offers tools for mitigating potential risks.
Speak To An Expert
Wondering how much money your organization might find from early payment discounts? ACOM Solutions experts can provide a no-obligation analysis of your payments to identify opportunities.