7 Ways Accounts Payable Automation Helps Improve Supplier Relationships

Supplier management, just like other business practices, has seen major transitions over the past few years, thanks to the growth in technology and the global scale of the economy. It is no longer limited to managing a large database of suppliers and daily communications with them but rather understanding them better and making them important partners in all business operations. With AP automation, interfacing with suppliers becomes smoother and consistent alongside ensuring timely payments, which goes a long way towards maintaining profitable relationships for both parties.

Healthy vendor relations ensure a smooth and secure internal supply chain, helps increase trust and reduce friction. As the AP department is on the frontline of supplier relationship management, one with an automated AP process can expect to cut their processing time by 74%.

How does Accounts Payables Automation serve suppliers?

Businesses are looking to automate their AP processes as it makes things easier. The last thing you might want to have is a dragging process from payables to prolong the supply chain side. Automation helps make it a faster, cleaner, and more efficient process. AP automation service providers will work with your suppliers to implement the payment methods they prefer and rapidly move the process from invoice to payment. Faster payments keep suppliers happier as they have more cash on hand.

A beneficial relationship between your suppliers and you, which allows you to work together, makes increasing security to protect your interests go much more smoothly.

Let’s take a look at seven ways how accounts payable automation improves supplier relationships.

1. TIMELY PAYMENTS

The easiest way to improve supplier relationships is to make timely or early payments. Paying on time elevates your credibility. Being honest with vendors can help build solid collaborations based on trust and mutual respect. This drives the AP department to a state where negotiating discounts on goods & services and discounts for early payments is a cakewalk.

It is estimated that 92% of businesses pay suppliers late. The biggest reason given by finance decision-makers for late payment was that their AP processes hamper their ability to pay online. From an operational viewpoint, solutions like AP automation can make this process efficient and more accessible to validate and approve invoices promptly. Fast approval of invoices puts the company in a better position to offer an early payment programme to their suppliers. This can be highly beneficial for both the suppliers and buyers as it makes a highly collaborative way to strengthen the supply chain.

2. CREDIBILITY

Payment delays lead to late-payment fees and shipping delays and affect credit ratings. Apart from effective communication and honesty, technologies that enhance efficiencies and accuracy of transactions like AP automation can help get your business on your vendor’s good side. Timely payment via AP automation increases a buyer’s credibility. When you have your supplier’s trust, you can quickly negotiate costs in exchange for longer term contracts and perhaps even gain discounts. Automating AP can help accelerate processing time, offer higher accuracy, improve efficiency, and optimize overall payment cycles. Businesses can avoid penalties as well as see an improvement in cash flow.

3. SMOOTH ONBOARDING

The first and most crucial step to building a healthy supplier relationship is setting expectations. A solid yet straightforward approach to supplier onboarding can simplify things for both the vendor and the AP department. Suppliers are generally curious about when and how they will get paid.  AP automation provides a focused enrolment campaign that reaches out to suppliers and enables smooth onboarding, making the process easy for both parties. Since all the information gets updated, suppliers won’t worry about payment delays or issues. Partnering with the right AP automation service provider can help you gain access to a dedicated team that is always active in the background, ensuring payment quality.

4. ACCURACY

To be profitable and trustworthy, accuracy is crucial. Automating accounts payable always ensures the highest level of accuracy. Via three-way matching, AP automation verifies vendor invoices against shipping documents and purchase orders. It also automatically populates vendor invoice data, including payment terms and contract-specific details. When suppliers clearly understand your expectations & obligations and get paid accurately and on time, or early, they are happy.

5. ENHANCED VISIBILITY

Automation helps you capture more financial data to support advanced analytics. It enables businesses to provide suppliers with real-time visibility into transaction statuses. With the right accounts payable automation solution, suppliers can easily log in and check the status of payments and invoices in real-time from a central location. They have all the information they need at their fingertips. Enhanced visibility enhances communication, considering how suppliers benefit from complete transparency. Moreover, it helps reduce the time spent fielding supplier inquiries and improving supplier relationships.

6. CONSTANT COMMUNICATION

Communication is key to developing productive and profitable business relationships. Automation helps the AP department provide enhanced data and analytics to their peers in procurement & management, which in turn helps improve supplier relationships. Systematic status updates offered via AP automation ensure constant communication between all contact points. This helps prevent confusions and misunderstandings that could get costly. Staying on top of the status also means protecting supplier relationships and business reputation while keeping issues like supply interruptions at bay.

7. IMPROVED WORKFLOW

Accounts payable automation reduces the chaos associated with manual processes. It enables a seamless workflow of all payables activities and enables quick accessibility via a central location to all stakeholders. Per a 2020 survey, 90% of the respondents believe automating tasks was highly advantageous. It resulted in a reduction in manual errors alongside increased speed and improved quality of work. With AP automation, AP staff can use workflow data to anticipate vendor queries and know if payment is on track. Plus, AP automation can also help reduce fraud and invoice errors, reducing stress for both parties.

Take your AP supplier management to the next level — partner with QX today.

Relying on manual AP processes isn’t just labor, cost, and time-consuming but can also take a toll on your supplier relationships, which can in turn hamper your productivity and business efficiency. Automation can help you optimize your business’ payables functions alongside improving vendor relationships.

Through QX’s accounts payable automation services, your business will be able to exploit new avenues of cost savings, improve management of its working capital and build better supplier relationships.

Originally published May 19, 2022 10:05:52, updated Jun 07 2022

Topics: Accounts Payable Automation, Accounts Payable Optimisation