Originally appeared in PYMNTS.com
Making the leap to better supplier onboarding — through digital, rather than paper — means breaking down the silos.
In a conversation with PYMNTS, Julien Nadaud, Senior Vice President of Innovation at Corcentric, said that within companies, different departments rarely communicate with each other or share data, leading to inefficiencies that, down the line, stymie optimal cash flow management.
In its simplest terms, supplier onboarding represents the process of collecting the information needed to set up official relationships and commence trading in goods and services (and of course, paying for them).
And as noted in the recently-released Payables Friction Playbook done in collaboration between PYMNTS and Corcentric, standardization is lacking when it comes to gathering data. A few headline numbers from the playbook: The basics are in place, with 72 percent collecting names and addresses, and roughly 66 percent collecting credit information.
Nadaud said that among the data, one number in particular shows both progress and room for improvement: About 63.4 percent of respondents say they use digital means to perform onboarding functions, to varying degrees.
“The 63 percent,” Nadaud told PYMNTS, “means that at least some companies have explored a way of onboarding their suppliers” but a more holistic approach could pay dividends.
The devil is in the details. Collecting data at the outset of a new business relationship is different than, say, managing the data that comes once the connection is firmly in place (such as making payments for goods and services rendered).
“What is interesting is that companies are going much further in terms of collecting more information … they have to ‘go digital’ because they cannot get this information from other ways,” he said.
One key driver underpinning a greater scope of data collection has been a changing regulatory landscape, where companies across various verticals must ensure they comply with anti-money laundering (AML) and other mandates.
At least some companies — at about 30.7 percent of those surveyed — use the onboarding process to add information that drills down into the partner firms’ ownership structure and whether international sanctions restrict the supplier/vendor.
Among those verticals doing such deep dives: financial services, healthcare and insurance. In other cases, where companies may be selecting, say, a cloud services provider (such as Amazon Web Services) to build out a data center, onboarding processes may involve setting up non-disclosure agreements before sharing sensitive data.
Beyond dotting I’s and crossing T’s as part of regulatory mandates, automating and digitizing more of the onboarding process also can help AP professionals keep track of and even streamline the negotiating process, ironing out even the smallest wrinkles of supplier agreements.
As Nadaud noted, suppliers cannot be fully onboarded until contracts are finalized and in place. About 42 percent of respondents to the survey said that the negotiation portions of their processing are done entirely through manual means.
Much of the inefficiency can be solved through adopting a software suite that spans a continuum of accounts payable (AP) functions, said Nadaud.
“When you have a suite that takes everything together, you change the game,” he said.
He said by way of example that by tying together vendor information with contract management and negotiation activities, far-flung departments could share information instantly.
“You start with collecting data about the company, about its financials, but also information about the capability of the vendor to provide the services you expect,” through the request for information. Flowing that information through other parts of the company that may deal with a non-disclosure agreement (NDA) or payment terms can help them manage their functions more efficiently, saving time and ultimately smoothing the entire AP process.
There are, of course, challenges in breaking down silos, where resistance to change can be substantial. At times it can be difficult to coax employees to look holistically at AP operations rather than just their job functions within various departments.
Emerging technologies can help break down those informational silos, where artificial intelligence (AI) can help analyze invoice data and other documents and help speed processing times. Blockchain can help foster collaboration and trust between companies as they negotiate and agree on contracts.
In the move toward digital onboarding processes, “you need to have the full collaboration of cross-functional people in the company” across departments, he told PYMNTS.