Objections to Expect from Suppliers with Virtual Payments – and How to Respond
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In our previous blog post, we discussed supplier resistance as a top impediment to moving forward with digitizing the payments process. A payments provider who approaches the supplier experience in a nuanced way can contend with this concern, but it’s also crucial that they’re able to respond to the most common vendor objections to accepting e-payments.
More often than not, the first payment method offered to suppliers are Virtual Cards (electronic card numbers issued to settle specific transactions). Suppliers will naturally have questions about the interchange fees associated with these cards. Once they tally up the total dollar amount these fees will represent to their business over time, they’ll likely surmise that the acceptance costs negate any benefit afforded by Virtual Cards. The best counter-argument is to help the supplier understand that the time, labor, and cost savings they’ll experience will more than exceed the interchange fees.
For starters, suppliers can do away with opening envelopes, handling paper checks, making trips to the bank for deposits, calling customers to inquire about payment status, and performing labor intensive manual reconciliation. In addition, they’ll no longer need to worry about the unknowns of when or if they’ll receive their payment or highly variable check float periods (the time after the buyer cuts the check but before the funds are deposited into the supplier’s account). Suppliers can also look forward to a reduction in chargebacks, exceptions, and collection activities that take a great deal of time to resolve. In other words, there are a plethora of efficiencies to reference if a supplier believes they cannot justify the “cost” of virtual cards.
Along with interchange fees, vendors and service providers may express apprehension about altering their existing processes when agreeing to accept virtual payments. They may believe they’ll have to modify how they submit invoices, update the payment terms extended to you, or adapt to receiving remittance information formatted in an unfamiliar way. If being asked to make these changes for just one client, the supplier will also factor in that they’ll have divergent handling procedures for different groups of customers. Thankfully, today’s leading payments providers have anticipated the supplier acceptance hurdle and have made adoption as easy and frictionless as possible for the supplier. Vendors won’t be required to revise their existing invoicing process just because they’re updating how they receive payments. Nor will they need to contend with confusing data to settle transactions; very straightforward and detailed remittance information can be sent electronically with each digital payment so they know exactly which invoices are being paid. Some payments solutions enable vendors to connect with multiple customers through one platform. So, instead of viewing e-payment acceptance as a mandate to change their handling, the supplier may actually be able to leverage the more efficient payment process across several business partners.
Suppliers may also be reluctant to embrace e-payments because they believe they have limited resources on staff to handle the transition. Fortunately, while electronic payments may cause a temporary reallocation of focus and effort at the outset, they can also present a tremendous opportunity to free up personnel who have been stuck handling tedious manual processes. As discussed earlier, electronic payments by their very nature enable team members to become more efficient. This means vendors can do more with fewer people and that having a small team in no way precludes them from incorporating e-payments.
Adopting new payments technology may seem like it will involve all sorts of contingencies and modifications at first, but many solutions merely streamline the way funds reach the supplier’s account and fit seamlessly into existing protocols and procedures. Even if e-payments necessitate slight shifts in supplier SOPs or workflows, the case can absolutely be made that they’ll impact their organization positively across the board. Suppliers may simply need to talk through how e-payments can help them achieve their end goals.
