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It’s easy to view Accounts Payables as an accounting piece – rendering payment for good and services. But let’s not overlook that efficient management of transactions, along with expedited financial information, are core competencies to maintaining a successful supplier relationship.

Naturally, timely payments keep the relationship strong. But again, there’s more to maintaining good standing with suppliers than just making payments. There’s extreme value in quality inquiry management. If you have ever been on the receiving end of a payment problem, not just as a business-person, but as an individual consumer or customer, you know how significantly this can create a negative perception and give pause or hesitation to future repeat business.

Conversely, strong customer service, especially when it relates to billing and payment matters, when handled above one’s satisfaction, can reinforce the relationship, or even make it stronger (because people expect problems to occasionally happen – it’s how the problem is dealt with that customers judge most severely).

Solutions with Accounts Payable (AP) automation that accelerate turnaround times, as well as reduce potential for manual errors and delinquent payments, all help to increase retention and strengthen relationships with existing suppliers. Responses from the Aberdeen Group AP/AR Benchmark Survey (September 2015) illustrate the priority around strengthening supplier relationships.

Top Priorities AP Management Leaders

priorities_ap_leaders

As the chart above indicates, leaders place a significant emphasis on supplier-related engagements, with “capturing early payment discounts” being the prevailing objective.

Early payment discounts – such as a buyer receiving a 1% discount if the bill is paid in its entirety within 10 days – are mutually beneficial because they mean that the supplier is recouping revenue faster, while the buyer is also saving money. The greater the confidence in an AP team’s ability to consistently pay on time or ahead of schedule, the greater the ability to negotiate realistic, yet favorable early payment discounts (at the outset of contracts).

Automation removes manual intervention from this process.

Where Financial Management Meets Relationship Management

relationship_management

Centralized invoice management means that, when employees work on the resolution of issues or discrepancies, information is far less likely to be disjointed or siloed in diverse locations. Factor in transaction audit trail capabilities, and centralization makes managing invoices significantly more efficient. As it turns out, leaders in this area are 87% more likely to have complete transaction historical capabilities.

Likewise, the ability to match invoices to purchase orders helps resolve any potential discrepancy that may be under review. Leaders are 19% more likely than Followers to have this capability available to them.

The ability to match invoices to goods receipts or services acknowledgments allows suppliers to close out sales cycles with automated alerts indicating that the product or serviced has been effectively rendered to the customer. Seemingly insignificant, this simple. common courtesy doubles as a verification system for close-of-sales inquiry management.

Supply Side Benefits: AP Automation vs. no Automation:

  • 49% Invoice Processing-Cost Savings: Invoice automation results in consistent reduction in costs/invoice processed. These savings can be passed along to the customer as discounts services (if you are so inclined).
  • 18% Fewer Days Payable Outstanding (DPO) – DPO Average with automation is 5.55 days shorter than without it.
  • 63% More Likely to Enjoy Straight Through Processing (STP) for AP Invoicing – Companies with automated AP systems are far more likely to have invoices received, validated and approved for payment in a completely automated manner.
  • 4.11x as many Invoices Able to be Processed

So, while it’s easy to view the AP process as simply “paying what is owed,” there are ways to improve both service and relationships through AP Automation. Your supplier is essentially the lifeblood of your company; give them special treatment where and when you can. AP Automation will make your world and theirs, infinitely easier.

For more information, please see my report, Reap the Benefits of Invoice Excellence with AP Automation.

Image Source (Creative Commons): GotCredit.

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