Dynamic Discounting: The Hidden Secret to Profit Protection and Supplier Satisfaction
The 2023 supply chain continues to experience the ripples of a changing economic landscape.
2 min read
DocuPhase
:
Jul 10, 2024 12:15:22 PM
The relationship that businesses have with their suppliers is key. These invaluable partnerships enable organizations to operate smoothly, funding the bottom line and overall business health.
But what happens when this vital relationship breaks down? Many things can negatively impact supplier relationships, but the most notable relates to payments. Late payments, invoice errors, and a lack of visibility into the payment process can all cause an otherwise healthy relationship to sour.
A great way to avoid these pitfalls is to rely on automated payment processes that keep payments timely, accurate, and traceable for both parties involved.
Payments are often the principal interaction between a business and its suppliers. When the processes behind them are inefficient, it can cause headaches for both parties, resulting in things like:
One of the most effective ways to efficiently manage important supplier payments is to leverage an automated AP Payments solution. A 2023 report from American Express states that 85% of executives at mid-sized firms reported that AP automation is paramount for efficient, accurate, and streamlined processes—all things that can strengthen supplier relationships.
Automated AP payments can significantly transform a troubled relationship with a supplier.
This can look like:
1. Improved EfficiencyThe more steps that are automated in your AP payments process, the quicker the invoice cycle time will be, ensuring that the right files are sent to the right suppliers at the right time. Another way to enhance your invoice-to-payment process is to eliminate the cumbersome processing of paper checks by relying on automated payments instead. This increased efficiency also means your team has more control over when you pay your suppliers, boosting the potential for early payment discounts for your business.
2. Enhanced Payment TransparencyRelying on an automated system that not only records data but also offers a real-time look into the status of invoices in progress can greatly improve visibility into your existing payment processes. Additionally, many payment automation reporting tools work to ensure that industry regulations and compliances are consistently met. Being able to trace comprehensive paper trails for each transaction also makes it easy to provide suppliers with detailed records as needed.
3. Reducing the Risk of FraudFraud is on the rise and only projected to worsen. B2B transactions like the ones happening between your business and its suppliers are no exception. Fortunately, AP automation software can validate invoices and supplier information to identify and prevent fraudulent events before they can impact your business—or its supplier relationships. As the rates of check and ACH fraud are particularly high, implementing virtual credit cards through automation can guarantee your business a safe, easily managed payment method. The more automated payments that flow between you and your trusted supplier increase the solution’s ability to register discrepancies, keeping your finances and data secure.
4. Building Trust with SuppliersAs previously touched on, payments often influence a healthy supplier relationship. Consistent, timely payments go a long way in establishing your business as a responsible, reliable partner. Happy suppliers are far more likely to provide dynamic discounts and beneficial contract parameters than their unhappy counterparts.
Additionally, automation itself allows suppliers to self-serve important information to check on the status of invoices and payments. This transparency works to enhance the lines of communication between your business and its suppliers, leading to better more comprehensive, on-time resolutions.
If your business is looking for ways to improve its current supplier relationships, schedule some time with one of DocuPhase’s AP Payments experts today!
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