Mastering global vendor payments: How to streamline payouts and improve supplier relations
*This article was written by Rubi Lebovitch, VP of marketing at Payouts.com.
As businesses expand their reach across borders, the complexities of managing international suppliers increase significantly. However, within this complexity lies an opportunity for forward-thinking companies to turn a traditional challenge into a powerful competitive advantage.
Four years after the peak of the COVID-19 pandemic, the importance of dependable supplier relationships has only grown. A recent survey of North American finance leaders revealed that 66% agree their supplier relationships have become more significant. This shift reflects a growing recognition of vendors as critical partners in the expanding global economy.
However, managing these critical relationships is anything but straightforward. Overburdened finance and accounts payable (AP) teams are caught in a whirlwind of competing priorities. They must balance cash flow management, reduce processing costs, and navigate hybrid staffing arrangements – all while suppliers demand faster and more accurate payments.
The costly impact of payment inefficiencies
The consequences of inefficient payment processes are staggering. In 2024, more than 80% of executives reported losing business due to payment process miscommunications, with over half experiencing this issue more than once. These inefficiencies aren’t just operational setbacks; they pose direct threats to a company’s bottom line and reputation.
As of 2023, a troubling 42% of businesses reported an average days sales outstanding (DSO) exceeding 60 days, nearly double the previous year’s figures (American Express). This delay in payments creates a domino effect, forcing many SMBs to seek alternative sources of working capital, which strains business relationships and increases the likelihood of operational disruptions.
AP teams are at the forefront of these challenges. Recent data paints a stark picture:
- Nearly half of AP teams spend more than six hours per month following up on vendor inquiries (SDC).
- 36% of AP teams still make 51% or more of their vendor payments via check (SDC).
- The persistence of check payments is particularly problematic. Industry experts estimate that it costs between $4-$20 to prepare each check, including labor, materials, and postage. This antiquated method not only slows down payments but also increases vulnerability to fraud (Paystand).
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The digital payment revolution
The solution to these challenges lies in the digital transformation of B2B payments. The days of paper checks and manual wire transfers are rapidly fading. In their place, a new ecosystem of digital payments is emerging, powered by automation, virtual cards, and embedded finance solutions.
This shift isn’t just about speed, though that’s certainly a factor – with suppliers ranking payment speed as their top priority. It’s about creating a seamless, end-to-end experience that supports not just payments, but all aspects of the B2B relationship.
At the heart of this payment revolution lies automation. The 2023 Accounts Payable and Receivable Trends report found that 85% of executives at mid-sized firms consider AP automation paramount for efficient, accurate, and streamlined processes. Nearly three-quarters reported that automation improves cash flow, boosts savings, or increases business growth.
The benefits of end-to-end AP automation are substantial:
- 89% of finance leaders say it allows them to do more with less.
- 67% report faster, more timely payments.
- The great majority of vendors (79%) also want to receive digital payments.
- 47% gain greater visibility and control to manage cash flow.
- 44% see reduced costs.
- 36% experience streamlined reconciliation.
But automation is just the beginning. The real game-changer is the rise of embedded payments. By integrating payment functionality directly into business platforms and workflows, companies can create a seamless commerce experience that transcends traditional financial transactions.
As digital payment methods become more sophisticated in the consumer realm, B2B transactions are also evolving. The demand for consumer-like experiences in B2B payments is clear:
Despite the clear benefits, the adoption of digital payments still faces challenges. Interestingly, both buyers and suppliers often mistakenly blame each other for the slow adoption. Accounts payable (AP) teams cite vendor unwillingness to accept digital payments as the top obstacle, while vendors believe their customers are reluctant to move away from checks.
In reality, 99% of vendors accept ACH (automated clearing house), 79% take wire transfers, and 64% accept plastic or virtual credit cards (SDC). The real barriers often lie in limited capacity to manage the transition and misconceptions about partner preferences.
The role of managed payment services
To overcome these obstacles, many businesses are turning to managed payment services. These services remove the burden of contacting, onboarding, and managing suppliers for digital payments. They significantly increase the number of suppliers accepting digital payments through ongoing outreach and continuous enrollment.
Moreover, white-glove payment services play a crucial role in improving supplier relationships. They address payment inquiries quickly and effectively, providing the human touch that suppliers are looking for. This approach not only streamlines the payment process but also enhances the overall quality of B2B relationships.
In this new paradigm, payments are no longer a back-office function, they’re a strategic imperative. Companies that fail to innovate in their payment processes risk more than just operational inefficiencies. They risk damaging vendor relationships, losing bargaining power, and ultimately, stifling growth.
The impact of payment innovation is already evident:
- 84% of manufacturers receiving real-time payments report stronger buyer-supplier relationships (PYMNTS).
- 70% of AP teams plan to increase digital payments over the coming year (SDC).
- Teams with digitized AP processes have increased ACH payments by 68% and virtual card usage by 34%, while decreasing check payments by 57% (SDC).
As businesses grow and expand globally, managing vendor payments becomes increasingly complex, prompting many companies to seek solutions that streamline their payment processes. Whether through ACH, wire transfers, or digital wallets, these solutions simplify payments by supporting multiple methods, reducing delays, and minimizing errors.
Payouts.com is one of the platforms designed to address these challenges by offering automated, flexible payment options that cater to vendors’ diverse preferences. In addition to payment processing, their service enhances transparency with real-time tracking, giving vendors clear visibility into their payments.
From transactions to partnerships
As we look to the future, it’s clear that the lines between B2B and B2C payments will continue to blur. The ‘consumerization’ of B2B payments is reshaping expectations, with businesses now demanding the same level of convenience and speed in their transactions that consumers enjoy.
However, this evolution goes beyond convenience. It’s about reimagining the role of payments in business strategy. Each transaction becomes an opportunity to strengthen vendor relationships, build lasting partnerships, and create value across the entire business ecosystem.
In this new landscape, the most successful companies will be those that see payments not as a cost to minimize but as a strategic tool to leverage. They’ll adopt innovative payment solutions to create a digital hub for business, fostering collaboration, enhancing efficiency, and driving growth.
The message is clear: in the world of global vendor payments, the future belongs to the innovators. By embracing digital transformation, automation, and embedded finance, businesses can turn a traditional challenge into a powerful competitive advantage. In doing so, they’ll not only streamline operations but also forge stronger, more resilient partnerships that can withstand any global challenges.
Building resilient partnerships is about managing transactions, but it’s also about embracing the tools that empower growth; take the next step with 8fig.
Have article ideas, requests, or collaboration proposals? Reach out to us at editor@8fig.co – we’d love to hear from you.
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