Supplier Portals: 5 Tips to Reduce Supplier Payment Friction
Self-service supplier portals offer major advantages for both the supplier and the company that works with them. Supplier portals are web interfaces for collecting and displaying information pertinent to suppliers’ interactions such as supplier payment details, invoices, payment histories, and tax ID and forms. Using a supplier portal can dramatically reduce data entry errors and provide additional services that reduce the dependencies and resource drain on accounts payable staff. A supplier portal that also functions as a supplier payment system can centralize supplier management and make reconciliation and reporting a much easier task. In the same way ATMs and online banking changed banking, supplier portals offer suppliers communication, convenience, and control when engaging in business transactions.
Accounts payable specialists often complain about spending much of their time operating as a ‘help desk’. Without a supplier portal and a proactive supplier payment communication system, suppliers or vendors are often left with no choice but to contact the AP department for payment related inquiries. Rather than spending their time having a meaningful impact on the business, accounts payable staff members end up feeling like customer service representatives – dealing with the minutia of supplier payments.
Supplier portals have some indispensable features including:
- 24×7 access to view real-time data
- Ability to update supplier information
- View history of transactions
While there are a lot of great features for suppliers, many still need to overcome the traditional friction related to sending invoices and requesting payment. Here are some keys to making a supplier portal a successful tool in supplier information management and supplier payments.
Onboard Suppliers by Articulating Benefits
Transitioning suppliers from traditional invoice-to-pay engagements to a web supplier portal interaction requires something many accounts payable staff may not be accustomed to: proactive communications. AP has traditionally been a more reactive entity due to the nature of how it interfaces with everyone. When an invoice comes in, they key that data into accounting systems or ERP. On due dates, they send out payments. If there’s a payment issue, the supplier contacts AP for clarification, investigation, or correction. Unlike a supplier portal, It’s all reactive.
With a self-service supplier portal, many of the interactions between the supplier and AP are more formulaic. The process of submitting invoices, inquiring on status are more transparent for the supplier and can be done at their convenience. At the same time, because the supplier is responsible for providing their payment and contact details, much of the data entry onus is on them, thus incentivizing them to provide the right information so they can get paid.
A brief, well-crafted email with some basic instructions is usually enough to get compliance from suppliers to begin using the portal. Ideally, over 90% of suppliers can interact this way, which relieves a significant burden from having to provide manual data entry and responses to payment inquiries.
Offer Localized Language Options
To expect an AP department to work in various languages is not realistic. Yet more companies are working with global providers which presents interesting challenges.
The global supplier is a perfect candidate for supplier portals. That supplier in Madrid is not beholden to the time and language barriers that add drag to their payments if they can provide their information via a supplier portal in Spanish.
Enable Supplier Choice
We’ve seen dramatic adoption of self-service portals by enabling suppliers to choose their payment method. Particularly with global providers, not all payment methods suit every person or situation. If the payment amount is low, you don’t want to send funds through an expensive mechanism like a wire transfer. If the person lives in Ukraine, do you automatically know what the best method is?
Giving the supplier a choice means they can find or be guided to the most optimal method for them. It also means they can securely provide the necessary bank details to ensure accurate payment. Emailing routing and account numbers or accepting them by phone is insecure and can still result in payment errors.
Provide Supplier Payment Workflow Status
“Did you get my invoice?” “Where’s our payment?” These are the questions suppliers most often pose their customers’ finance departments. At the same time, those questions are interrupters to efficiency. The AP person then must look up the vendor, find the invoice, query approvers, review the details, and communicate back to the supplier. If there’s an actual problem (e.g. failed payment), someone will need to solve that. Worst, the supplier might go right to the requester for status. Now you’ve taken up time from two people in the organization for a simple payment inquiry.
Any supplier portal needs to provide status regarding payment approvals, remittance, etc. – and ideally, proactively email the supplier status or notify them of issues related to their payment. That feature alone is enough for a supplier to want to engage with the portal, assuming the information is accurate, clear, and accessible.
Rethink Payment Runs
Many companies rely heavily on scheduled payment runs to suppliers. It makes sense since the process of payments is arduous. Walking approvals, checking against fraud, signing into banks for ACH or wire transfers, printing and sending checks, funding accounts, etc. all take up valuable time and nearly all of it has been manual. And when it’s time to reconcile payments for financial close, that takes up even more business cycles.
But if you’re going through the process of offering suppliers the visibility into payments, making payment runs once or twice a month hinders the value of the portal to the supplier. Instead, consider making payments every week (or every day) by utilizing supplier payment automation, then posting that data as it happens for the supplier to view.
