The accounts payable process involves more than catching up on outstanding bills—the workflow can make or break your supplier relationships, especially when you’re dealing with suppliers or vendors located overseas.
Think about it: when it comes to paying foreign suppliers, you’re not only handling invoices but also dealing with tax compliance, fraud monitoring, currency exchange rates, banking requirements, and more.
If your supplier payment process can’t nimbly respond to these factors, you’ll have to manually adjust your supplier payment process to each vendor’s situation. Simply put, your accounts payable workflow won’t thrive on a global scale.
What is a Vendor (or Supplier) Payment?
A vendor payment–or supplier payment–is the last step in the purchase-to-pay cycle, when a company pays an outside vendor for purchased goods or services. Supplier payments can be made automatically through a variety of online platforms that help streamline and secure the process of making a supplier payment.
When the company initially orders goods or services from this external provider, a purchase order is created. Once the goods or services have been delivered, the company will receive an invoice from the external provider and will then pay this vendor invoice in the form of a supplier payment.
When you view the supplier payment process as essential to fostering strategic partnerships, you’ll create an accounts payable process that scales with global growth. You can ensure your AP workflow grows alongside your expanding business operations when your supplier payments process has the following three aspects.
3 Tips for Growing Vendor Payments on a Global Scale
Start optimizing your B2B payments and improving vendor relationships by implementing these three steps into your vendor payment process.
1. A One-Size-Fits-All Onboarding Process
Of course, every business wants to have a smooth and easy onboarding process for their suppliers, but this is often easier said than done.
For example, it’s common for accounts payable to email a new vendor or supplier a W-9 tax form (Request for Taxpayer Identification Number and Certification). After receiving the completed W-9, accounts payable will manually transfer the supplier information into the accounts payable system. However, the W-9 form is only for U.S. taxpayers; a foreign vendor would need to fill out a completely different tax form—a variation of a W-8 tax form depending on the type of international vendor.
In other words, the onboarding process would require accounts payable staff to identify the correct tax form for each vendor manually. Doable? Yes. However, when it comes to a high volume of foreign suppliers, a case-by-case onboarding process is inefficient.
It’s possible for accounts payable to have a one-size-fits-all onboarding process for domestic and international suppliers. Just take a look at how industries like IT are automating tasks that previously required manual intervention: to reset an online password, users had to email the IT department, and then an IT representative would manually reset the account.
Now, it’s common for users to request a password reset via a self-service portal, and thanks to automation, resetting a password takes only seconds.
When applied to the supplier payment process, a self-service portal enables vendors to directly input their tax information into a company’s accounts payable system, and automation technology allows the AP system to quickly identify and complete the correct tax form for each vendor. When companies are looking toward handling a high volume of suppliers on an international scale, an automated self-service portal will help their accounts payable keep up with the demand and make timely payments.
2. One Platform for Invoice and Vendor Payment Management
The accounts payable department often treats invoice management as a separate workflow from the supplier payment process with the tasks executed consecutively: invoice approval comes first followed by the remittance. However, the thoroughness to ensure the validity of invoices can lead to late payment for suppliers.
Companies can speed up their supplier invoice management system through automated data extraction and machine learning technologies. But international remittances still need to align with adequate cash flow, so accounts payable needs the flexibility to schedule payments in sync with the availability of funds.
Your accounts payable needs visibility into the separate workflows—invoice management and supplier payment process—that enables them to work in tandem.
For example, an accounting system should be able to gather approvals for an invoice, which is an invoice management process, while also verifying the supplier banking information, which is a supplier payment process. The seamless coordination of these workflows will ensure that your accounts payable system can handle invoice processing and payments from an international supply chain when your business calls for it.
3. AP Automation to Ensure Prompt Supplier Payments
Hands-on decision-making dominates the accounts payable workflow, but for an accounts payable system to grow with global growth, the process must transform manually executed steps into automated tasks.
For example, pairing invoices to purchase orders and routing emails for invoice approval no longer needs direct oversight; accounting software automation can complete these tasks within seconds, allowing the AP staff to focus on issues requiring investigation, such as reconciling invoices that trigger verification errors. When it comes to the supplier payment process, automation technology can complete manual tasks like OFAC compliance and validation of supplier data in real time.
What’s more, vendors can choose their preferred payment method while onboarding–which means one less task for you to worry about. Automation can ensure they are paid via ACH, credit card, bank account direct deposit, or whichever method is agreed upon. This helps strengthen the quality of your supplier relationships.
Summing It Up
Don’t let the challenges of vendor invoice payment in an international supply chain intimidate you from growing on a worldwide scale. When your business operations expand beyond your domestic borders, your accounts payable process should seamlessly grow alongside that demand.
When your supplier payment process has these three elements—a seamless onboarding process, a single platform with visibility into invoice management and supplier payments, and automation technology—you’ll have a workflow scalable for global growth.
Ready to jump start this process? Download our eBook, “A Guide to Global Supplier Payments”, which looks at global market research and how to implement best practices.