The rising numbers of late payments and the cascading impact that results are of growing concern, especially for small to mid-sized businesses. Getting to the root of why suppliers are frequently on the receiving end of late payments, and knowing what your financial institution can do to help drive payment efficiency and prevent late payments, is key to bridging the gap and finding a win-win for buyers and suppliers to reduce non-payments.
A recent survey found that 92% of financial decision-makers admitted to paying suppliers late. Prioritization of other payments, unsatisfactory quality of service, incorrect reporting, and suppliers not chasing payments are all common reasons businesses justify late payments. The most common being that current AP processes don’t ensure on-time payment processing.
Did you know that streamlining and automating the management of invoices can cut average processing costs by 50%?
Inefficient processes and lack of automation can cause road bumps in the payment process, but there are a range of strategies organizations can adopt to reduce the occurrences of late payments.
Treasury specialists recommend good cash flow, which starts with effective cash management. Automating your AP processes can help strengthen the supply chain for buyers and suppliers, ultimately improving buyer-supplier relationships overall.
Adopting the latest payments technology can increase efficiency through electronic transactions, which provide not only faster payments but also increased visibility. More than 70% of global invoices are paper-based, even though AP automation provides features such as scanning, inbounding invoicing OCR, cloud-based accounts payable approval workflow, and more.
AP automation also reduces fraud risk and daily sales outstanding (DSO), making it easier to receive, validate, and approve invoices as well as improve control and visibility within the payment process. All of this adds up to the digitization of B2B payments.
There are a variety of ways to help invoices get paid more quickly and efficiently with technology. When it comes to Accounts Receivable, here are a few good tips to get paid on time:
- Check out your customer’s reputation and credit at the start of a new business relationship.
- Document payment conditions ahead of time to ensure your customer best understands how and where to pay you. Clearly specify payment terms including full bank account details.
- Distribute invoices as soon as your product or service is delivered. Sending invoices electronically through a cloud-based platform is faster, more reliable, and cost-effective.
- Use a cloud-based invoice distribution platform to track invoices for end-to-end payment visibility. This allows you to see if and when a customer downloads an invoice, making it easier to send payment reminders.
The opportunity to receive funds faster is real. It’s important to understand the latest developments to mitigating risk and help businesses manage finances more effectively.
Finding the right partner to work with your financial institution will provide the tools needed to help pay and get paid on time. Stay informed about the latest on how to reduce the occurrence and impact of late payments by tuning in to the full podcast “How to reduce the occurrence and impact of invoices being paid late”.
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