Strong supplier relationships are critical for all types of businesses. You’ve probably completed a supplier selection process that identified those companies that can best meet your needs. You’ve carefully reviewed the contracts and negotiated a mutually beneficial agreement. You’re committed to monitoring each supplier’s performance, and you set up open lines of communication.
However, those steps are only part of the process for establishing strong supplier relationships. The most important thing you can do is pay your invoices on time. In fact, effective accounts payable processing will have a large impact on your supplier relationships and on your company’s profitability.
Timely Payments Build Strong Supplier Relationships
What tops your list of what you want from your suppliers? Fair prices? Timely and accurate deliveries? On the other hand, what tops your suppliers’ list of what they want from you? Being paid on time is undoubtedly at the top of that list. It’s easy to see that you can build relationships where both parties get what they want most. You need to choose your suppliers well, and then you need to pay them accurately and on time.
When you build strong, mutually beneficial relationships with your suppliers, several things are bound to happen. Your suppliers will be more likely to give you preferential treatment when it comes to pricing and credit terms. Both of these things can help make your company more profitable. Vendors will also be more likely to go out of their way if you’re having a problem.
A vendor who is willing to work with you on a rush shipment because you just received an unexpected big order is worth his weight in gold. In addition, it helps you to solidify a competitive advantage when you can take orders others may not be able to fill.
Effective Accounts Payable Systems Make the Difference
You know you need to pay your suppliers on time. But, there’s more to the issue. When you’ve built a team of strong suppliers, each one may have given you credit terms that include a discount for cash payments. Your challenge, then, is to manage your cash flow and your invoice processing system in order to be able to take advantage of those discounts.
You can use technology advancements in accounts payable to reduce costs, which could increase cash flow. In addition, automating the entire accounts payable cycle, from invoice processing to vendor payments, will allow you to meet those cash discount dates easily.
With paperless accounts payable automation, invoices are converted to an electronic format where they are verified, matched, and then routed for intermediate and final approval. Compare this streamlined approach to a paper-based system, and you’ll appreciate the time and cost savings.
You can even go a step further and eliminate paper checks with electronic payments. As a result, you’ll be on the leading edge of technology with a completely paperless AP cycle.
Once you’ve achieved that goal, you’ll be at the peak of achieving greater efficiencies and cost savings. The reduction in expenses will allow you to improve profitability. You’ll also be in a position to impress potential suppliers and encourage them to put you on their preferred customer list with all the benefits that implies.
Accounts payable processing isn’t the first thing people think of when they consider how to cement their vendor relationships. However, with the advances in technology, you can stand far above your competition in terms of attracting the strongest supplier partners and keeping those relationships healthy over the long-term.
Are you ready to take your accounts payable to a new level? If so, contact us at 800-699-5758 or online. Our ACOM experts can help you transform your accounts payable department.