What Is Vendor Enrollment for B2B Payments Networks?

Vendor enrollment, also known as vendor onboarding, vendor enablement, supplier enrollment, or supplier enablement, is the process of collecting relevant vendor data and getting a business you purchase from set up for a program or network you use to run your business. Examples can include vendor enrollment in an online purchasing portal or suppliers joining a business payments network.

In this article, we will focus on enrollment in a business-to-business (B2B) payments network, like Paymode. Getting suppliers to enter such a network is a seemingly straightforward task but it’s often complicated by poor or fraudulent vendor data, supplier communication issues, and antiquated workflows. Failure to properly enroll vendors in a payment program can present problems ranging from an overreliance on check payments to significant fraud losses.

Here, we’ll broadly define vendor onboarding in the context of business payment programs, discuss issues that arise from poor or missing enrollment processes, and provide tips on how to do it right.

Understanding Vendor Enrollment in B2B Payment Networks

Payers eager to save time and money on their vendor payments will often turn to B2B payment networks to do so. These payment networks allow payers to replace slow, fraud-prone checks with more secure, efficient ACH and virtual card payments – which is an increasingly attractive proposition for many businesses.

The proposition is unfortunately a hollow one if vendors refuse to use the network, which is why enrollment is necessary in the first place. But first, let’s back up and talk a little more about what a B2B payments network is.

Essentially, these networks are walled off solutions for businesses to securely exchange payments, typically via digital methods like ACH and virtual card. The rationale for payers and vendors using a network is varied, but it essentially boils down to consolidating the way they make and receive payments while adding benefits in terms of efficiency, security, and revenue.

You can find more information in our related article about B2B payments networks but suffice to say they enjoy a myriad of benefits over traditional check payment processes.

The enrollment process involves a few steps, which tend to only vary slightly per network and payment program.

• Notifying the vendor of a change in the way they’ll be paid. Generally, this is done via a letter delivered via mail, email, or both. If the vendor has traditionally received checks, a payer and their payment network will let the vendor know why they are now requesting to pay via ACH or card. The communication should also explain the rationale, timeline, and potential benefits clearly, and there should be multiple touchpoints/reach-outs.
• Vendor enrollment. Processes vary, but the vendor will then be asked to enroll in the network. This can be done via phone, either by the payer or the partner, or via an online portal or process flow. Vendors typically need to provide basic business information, a Tax Identification Number (TIN), and bank account information if they are opting in to ACH payments.
• Verification and authentication. Once the vendor’s information is received, it needs to be vetted. Many fraud incidents happen because this step is skipped or not done properly, which is another argument for trusting payments to a secure network. Experts and algorithms should work in tandem to figure out whether the business is legitimate, the contact is real, and the bank account belongs to the business.
• Payments are made. If all goes well with the authentication process, vendors are then set up to receive payments through the network. The enrollment efforts then shift to monitoring to ensure accounts aren’t compromised, support to ensure vendors stay happy, and program growth discussions to help payers enroll more suppliers.

Common Pain Points in the Vendor Enrollment Process

Unfortunately, those four smooth-sounding steps above are not without speed bumps. Understanding why vendors can be reluctant to enroll in programs through B2B payments networks can help to overcome those objections. Here are five common pain points for vendors to watch out for.

Comfort with check and/or aversion to change

For a certain percentage of suppliers—PYMNTS.com found it was 21% --check is still the preferred payment method. Others may not like check payments but prefer not to change the way they’ve reliably been paid for years. Comfort, even with uncomfortable payment methods, tends to be potent.

If that’s the case, vendors need to be spurred into making a change not by threats or cajoling, but by an explanation of the benefits of a switch to more modern payments. An ultimatum from a valued customer—switch or else—can also work, but it’s better for the business relationship to lead with the good and not the bad.

Security concerns

While enrolling in a network is inherently more secure than checks and traditional electronic payment processes, there’s wariness out there. Isolated, high-profile incidents of successful fraud against payment networks can cause suppliers to balk, especially if they don’t know what security standards they should be looking for.

A clear explanation of why you’re making the switch to paying vendors via a network can help, especially if you can provide information from your partner about the fraud prevention measures and track record the network brings to bear.

Unfamiliarity with partner network

This can go together with security concerns but often goes further than one dimension. In the same way consumers would hesitate to enter credit card data and make a purchase from an online retailer they’ve never heard of, suppliers can balk at entering bank account information and entrusting their vital business payments to a company unfamiliar to them.

This is where a payer may need to do a little more lifting, with the partner helping by providing information about how long they’ve been in business, how many companies use their network, and (again) detailed information about security. In the end, though, your level of trust in the network should help to convince a vendor to enroll.

Lack of benefits to enroll

Even with trust in the network at a basic level and a willingness to abandon checks, a supplier may be hesitant to do so if there’s a perceived lack of benefit. Changing the way a company accepts payments is not a zero-effort change, and incentives can spur action in a way a simple request can’t.

Payers should work with a network that offers those incentives. These can include more detailed remittance and accounts receivable process automation, scheduled reporting and payment trackers, or even the ability to streamline invoicing. The more benefits and the clearer those benefits are, the more likely they are to lead to enrollment.

Fear of cost

This is perhaps the most difficult to overcome. Accepting a check carries significant costs, but they’re costs that are more difficult to visualize when you’ve taken them for years. Suppliers may be far more hesitant to accept the percentage fee that goes with Premium ACH programs or virtual card payments, viewing those as something more than the cost of doing business.

If you are asking your vendors to enroll in fee-based payment programs, it’s critical to blend all the advice above to make the case for doing so. Those fees fund better security, more robust accounts receivable benefits, and other perks of enrollment, and tying the cost of receiving these payments to real improvements in cash application and accounts receivable more generally is the key to overcoming that objection.

How to Do Vendor Enrollment the Right Way

With those five core challenges identified and potential solutions outlined, it’s time to talk about the best possible approach to enrollment. Here’s a hint: It doesn’t involve your overworked accounts payable team picking up the phone and making the case.

Instead, lean heavily on your payment network partner to make the approach, with your tacit blessing and endorsement to ensure vendors know the request is coming from you and why it’s important.

Quality networks have dedicated vendor onboarding teams who employ smart campaigns to vendors, ones that lean with the benefits to accounts receivable and clearly explain costs, processes, and how to enroll. These representatives should be able to explain how they handle secure vendor data management, protect payments, and manage questions and potential trouble spots around both enrollment and your ongoing business relationship.

Getting suppliers onboarded in a business payments network this way minimizes the time your team spends, can protect your relationships with valued vendors, and streamlines the process for them. Electronic payments through a secure network are inherently faster and more secure for both sides of the transaction, so simply continuing with checks or putting enrollment on a back burner has the potential to burn payers and vendors alike.

Successful enrollment means efficiency gains for payers and vendors, protected payments, improved visibility, and in fee-based programs, revenue for payers in exchange for a suite of accounts receivable tools for vendors. Those are ideal gains for businesses plagued by rising costs and the declining utility of traditional payment processes and methods.

Vendor enrollment in a B2B payments network is critical to modernizing, streamlining, and securing the way you pay. Doing so without strong-arming your suppliers and creating bad feelings is equally important. By putting your vendors’ success at the top of your priority list and entrusting enrollment to a payment network partner who understands how to overcome objections, you can ensure the success and security of your business payments now and many years into the future.

Learn More about Vendor Enrollment with Bottomline