Three Reasons to Pay Your Supplier Invoices on Time – And Five Ways to Make Sure You Do

Have you been paying your suppliers later than you’d like to recently? You aren’t alone. Research suggests late payments have been an increasing problem lately. The FSB reports that 62% of small businesses have been subject to late or frozen payments in the wake of COVID-19.

Of course, the chances are that if you’re paying suppliers late it’s more by circumstance than design. We’ll look at ways you can streamline your AP process and make it more efficient so you can tackle the problem in your business. But first, let’s recap why paying on time is so important.

A 10-Step Guide to an Efficient Supplier Invoice Process

How can AP achieve higher levels of efficiency to free up valuable time and resource?

Download now

Prompt Payers Build Better Relationships

It’s an old adage because it’s true. People do business with people. When a business pays on time, the people involved build much better relationships. The supplier is more willing to go the extra mile to deliver better service.

There’s also the relationship between finance and the rest of the business. When invoices are paid on time, you have a much better working relationship with team members in your organisation.

Paying on Time Enhances Your Reputation and Gets You Business

Even before the pandemic, the problem of late payments was widespread.

In 2017, the Duty to report legislation aimed to tackle the problem with late payments, with the worst offenders being called out. Businesses may also voice their dissatisfaction in public arenas about late paying customers. 

On the flip side, prompt payment is lauded – and often publicly too. For example, I’ve seen several examples on LinkedIn recently of people posting to name and thank customers who’ve paid them promptly. It’s a small gesture that boosts the customer’s reputation as a good business to do business with.

Paying on Time Saves You Money

Research suggests 60% of UK businesses say they have been charged late payment fees. Quite simply paying on time saves you money. Not only that, building up a track record for paying on time every time could give you leverage in discussions around prompt payment discounts or more favourable terms.

A Best Practice AP Invoice Process

Of course, you aren’t paying your suppliers late because you don’t care about them or your reputation or because you aren’t bothered about saving money. It’s often simply because your invoice process is letting you down.

This may have been especially true in the past year. If you’ve got a paper-based invoice process, having staff working remotely will have made life even more difficult.

But there are things you can do to address the problems.

You could consider:

1. Centralising where invoices are sent: Standardise and communicate a single place where invoices should be sent to prevent confusion, delays and multiple copies circulating.
    
2. Enabling suppliers to send electronic invoices: Most suppliers prefer to email their invoices – make sure you simplify the process by enabling this digitised functionality.
    
3. Taking advantage of machine learning: The technology exists to automatically and accurately digitise and read data on invoices to input straight into your finance tool and it can cut invoice capture times by 50 – 75%.
    
4. Importing invoice images directly into your finance tool: It makes it much quicker to cross-check details and for historical auditing purposes.
    
5. Outsourcing invoice capture to professionals to save time: Take the manual process off your team’s shoulders and guarantee high accuracy when you outsource to invoice experts. This frees up your team’s time to focus on more value-added activities.

Remember too that invoice automation tools such as Concur Invoice speed up the supplier invoice process by 75% and ensures 13% faster payment to suppliers. You’re also in a better spot to time your payments more effectively to ensure you’re making your cash work harder for you.

Conclusion

Paying promptly shows you’re a business it’s good to do business with. In this climate, that’s more important than ever.

If you’d like more information on streamlining your AP invoice process, download A 10-Step Guide to an Efficient Supplier Invoice Process.