Now that you’ve automated your accounts payable processes and implemented e-invoicing, how do you get your suppliers to comply? Show them the benefits.
Companies that exhibit reluctance to e-invoicing often cite the expected lack of compliance by suppliers as a primary reason for their concern. So being able to convince suppliers that they will also experience significant benefits by submitting their invoices electronically is a big step in moving the process along. We’ve talked before about the main benefits of e-invoicing: faster processing and approval cycles, reduced cost, greater accuracy, increased visibility, discount capture, and improved dispute handling.
What suppliers need to realize is that they can also reap rewards from these same benefits, especially if the e-invoicing solution implemented by the customers includes a supplier portal.
A supplier portal is, quite simply, a Web-based, self-service interface that automates invoice submission and allows suppliers to view invoice status and payment information, 24/7. Suppliers can now see for themselves which invoices have been received, which have been routed to the appropriate approvers, which are being held as exceptions, and which have been submitted for payment. That results in a marked decrease in phone calls to the AP department (which makes for a happier customer…and supplier). This also gives both parties the information they need to better manage their cash flow. So why the resistance? Let’s deal with a primary human characteristic…people, by and large, resist or fear change. But for suppliers, the resistance is more than just a reluctance to change (although that is still a factor).
To help companies assess where their team stands, from laggard to world-class, Corcentric recently hosted an on-demand webinar, “Addressing the Maturity Gaps in Procurement – Approaches to Improved Sourcing Efficiency and Effectiveness,” in which I was a participant, along with my Corcentric colleagues, David Pastore, Senior Director, Sourcing Operations and Mike Croasdale, Senior Director, Group Purchasing Organization (GPO). We were also fortunate to include The Hackett Group’s Chris Sawchuck, Principal & Global Procurement Advisory Practice Leader and Jonathon Fehring, Director, Procurement & P2P Executive Advisory.
When it comes to procurement maturity, the numbers don’t lie.
The Hackett Group’s 2020 Procurement Benchmark measured how best-in-class, mature procurement and sourcing organizations stood in contrast to their peers and the results are striking: Best-in-class organizations realized:
Additional barriers include potential fees, tech implementation, and a sudden lack of human contact. Depending on the e-invoicing solution implemented, a supplier’s resistance can be mitigated.
Suppliers don’t want to pay to submit their invoices. Force them into that situation and they’ll stay with the status quo. Some supplier e-invoicing models require suppliers to pay a percentage of spend; some require a flat monthly fee; but the path of least resistance tends towards those e-invoicing models where suppliers pay nothing. Make sure when evaluating a solution, there’s no charge to suppliers.
Hardware, software, training: these are all expenditures that suppliers don’t want to incur, especially since many of them are still comfortable with using paper invoices. A cloud-based, SaaS solution eliminates the first two concerns, since there’s no cash outlay necessary. Confirm that the solution you’re considering includes on boarding and training suppliers to use the system, and that the solution is easy-to-learn and easy-to-use.
Some people just like to talk to other people. No automation solution can answer that need; but that’s not the purpose of business. Suppliers, like their customers, look at the bottom line, not at social interaction. Time spent on the phone tracking down payments or discussing disputes is time likely not spent on more productive tasks.
Here’s a fact that you should remember and suppliers need to realize. The business world is changing; supply chains are often global in nature; and throughout a growing part of the world, e-invoicing is mandated. So whether your suppliers like it or not, e-invoicing may well become a significant part of their business dealings. The important thing is for you to communicate with your suppliers early on, to relieve their fears and concerns, and to convince them of the benefits they’ll realize. One of the ways to allay fear is to remind suppliers that many are already submitting invoices electronically as PDFs or TIFs, so they’re already part of the way towards full e-invoicing.
Success, however, will likely depend on which accounts payable automation solution you choose, so make sure of the following when talking with your provider:
- Supplier portal is included
- No charge to suppliers
- New suppliers are easily added
- Easy to implement and use
- Secure log-in for vendors
- 24/7 visibility
If the solution includes all of the above, you could be well on your way to breaking down the barriers your suppliers have built and giving them the all clear to come aboard. Learn more about e-invoicing and supplier networks.