In my recent article AP/AR Automation: Securing Cashflow, Enriching Partnerships, I explored how, like irrigation is to a farming community, AP/AR automation is one of several solutions key to achieving business success.
Mechanically powered technologies such as tractors, plows and threshing machines contribute significantly towards increased production. All these technologies and more provide farm operators with the mechanization necessary to produce crops (and income), but they come at a cost. The overall health of the farm depends on the farmer being able first to obtain and then maintain these critical items of equipment if there is any hope for positive cashflow.
Similarly, for organizations that depend on vendors and suppliers to operate and accomplish their business goals, developing an effective supplier payment strategy to keep them paid reliably and on time is integral to the success of those goals.
Planning your way to abundance: structure helps you grow
Whether we’re talking about machinery or digital assets, there are many moving parts to consider. Imagine how arduous it must have been during the early days of agricultural trade and commerce when a farmer had to manually bookkeep before or after a grueling 12-hour workday in the hot sun. On top of that, they still had to juggle cash, loans, parts and mechanics to keep the equipment running for another season. If they didn’t, there wouldn’t be a next season.
Business leaders today face far more complex processes, such as those involved in managing their vendors and supply chain. Anything they can do to simplify and eliminate manual steps to ensure they receive supplies reliably — such as implementing automated supplier payments — means the organization can keep delivering its goods and services. And that means the cash keeps coming in.
An effective strategy for automated supplier payments benefits the company in numerous ways:
- Savings in time and costs
- Improved visibility of the whole AP process
- Strategies that can be quickly developed from the platform in real-time
- Positive impact on working capital with better leverage on the approval process
Finance, farming and far-flung friends: payment methods that translate near and far
Some of the highest quality farming equipment comes from all over the world. Italy, for example, is home to several brands that produce top-tier irrigation and harvesting equipment. Whether for combines or widgets, paying suppliers on time requires accommodating various domestic and international payment types. Today’s global payment systems allow companies to pay their suppliers and receive payments from their customers, locally or across borders, in multiple currencies. Paying from within an automated AP system means:
- Real-time visibility and approval workflows
- Less back and forth emails and calls
- One central tool in multi-ERP environments
Integrated payment methods further simplify and expedite the payment process by:
- Offering your suppliers payment via their preferred method
- Incentivizing and enabling the use of value-generating payments methods, such as virtual cards addressing specific segments of the supply chain
More flexible options enabled by integrated supplier payments
Whether an organization needs farming machinery or digital software to keep it up and running, everyone involved in business transactions benefits from the flexibility of automated supplier payments.
For example, dynamic discounting is a source-to-pay (S2P) process allowing buyers to draw from their own balance sheet to pay sellers, leveraging their liquidity while receiving a capital benefit.
Speaking of discounts, automated payment systems can allow your suppliers to offer you early payment discounts — a reduced price based on how soon you choose to pay. When suppliers propose early payment discounts on their invoices, you can automatically schedule the payment on the discount expiration date to ensure the maximum benefit from the discount.
Another collaborative payment process made possible by such integrated payment systems is supply chain financing or “reverse factoring.” In this flexible scenario, suppliers can receive early payment on their invoices via buyer approval on their invoices for financing by a bank or other outside financier.
Creating value together: automating supplier payments enhances business for everyone
Gone are the days of manual processes that often resulted in costly errors and precluded the ease of interaction between businesses we can enjoy today. Automating supplier payment processing creates mutual value for all parties involved by saving time, building trusting relationships and increasing the potential for collaborative configurations that empower buyers and suppliers alike to grow the businesses they’ve always wanted.