How Improving Your Accounts Payable Affects Supplier Relationship Management
Fostering stable and trustworthy relationships with your suppliers is one of the best often forsaken practices in business. Something not as celebrated as customer relations, but just as important. After all, you depend on them to ensure continued operations of your business so building lasting relationships with your suppliers should be a primary concern.
What is Supplier Relationship Management
It is a method of assessing and ranking suppliers based on their overall contribution to your business. This process could be simple or complicated depending on the scale of your business. When you are a start-up with few suppliers, it isn’t a burdensome task but when your business has had the chance to expand, your supply chain becomes more complicated and a need to establish a system will arise.
The depth of your relationship with suppliers will also vary. Some may have a one-layer relationship, others have a collaborative connection and run deeper than a simple buyer-seller relation.
In the Company, the AP department will have the principal role in establishing good relations with suppliers as they are in charge of payments. Vendors who are not paid on time may withdraw from the relationship or impose uneasy terms or delay shipment of your supply. This broken relationship could trap your company in a corner where you have to scramble to replace your supplier which often leads you to settle with unfavorable terms.
The Importance of Supplier Relationships
Your supplier relationships will directly influence your operations that can even be felt by your bottom line.
Repeated supplier change can cost a company some money. When you prioritize supplier relationships there are fewer chances of service interruptions, improving your negotiating position with your supplier.
Invest in streamlining your payments. Automated payables are one of the best ways to improve supplier relations. It decreases human error and provides automatic payments so you don’t miss any deadlines.
How AP Automation Improves Supplier Relation
AP Automation can provide positive benefits as it will reduce costs and increase operational efficiency. You might worry that changing your process could affect any relationship you have with your supplier but there are good results that could come out of it.
First, automated payments will make the process easier for your suppliers. The initial discomfort of switching processes will quickly dissipate once you and your supplier experience the comfort of automation. Once the vendor’s information is uploaded into the server, it’s a pretty straightforward process from then on. Suppliers won’t have to worry about any payment delays.
Secondly, automation provides transparency. It makes it easy for vendors to log in to the program and view the status of the payment. Looking for the right people to ask about payment updates won’t be a problem anymore. Information is within the reach of the vendor and processes such as remittance and reconciliation will become easier for everyone.
Automation also lessens the friction between invoices and payment meaning, the process can flow swiftly and accurately from invoice to payment. Prompt payments mean satisfied vendors.
Finally, it can help gather data for financial analytics. It accumulates data in one place and allows the parties access to them. It can provide information to help assess the efficiency of internal operations.
By improving your accounts payable through automation, you open the doors to better supplier relations and in turn better payable terms, and better efficiency for your operations. Suppliers are after all business partners that play a part in financial success.