Lower the barriers

I’m used to January creeping by slowly, but this January seems to have vanished in a flash. We started off the first week in Feb with a working dinner arranged to discuss, surprise, surprise, how we can get small suppliers paid quicker. Everyone around the table from business support organisations to accountants and bookkeepers’ bodies and cloud accounting software people has the same goal: make it easier for suppliers to invoice and for customers to pay quicker. However, we understand the barriers. It’s how to lower or remove the barriers that’s taxing our minds.

It's hard to engage with suppliers, particularly the smaller one, to get information to them that would help.

Customers are often bogged down in processes, many of them out of date because of the costs of keeping up to date, which include huge numbers of steps to get an invoice approved before it can be paid.

Contracts can be a nightmare, in that the terms aren’t clear, the language is legalistic and suppliers are bemused but sign anyway, or there’s nothing in writing at all about when suppliers will get paid.

We need the help of customers to address all this and the bigger firms with Boards need to be willing and see the benefits of spending whatever it takes to improve the processes.

Put the work in before the supplier agrees to take the work on. Explain, discuss and negotiate the terms of working together, including payment terms and get to know each other’s business. Many people working in the procurement, approvals or payment teams of bigger businesses have never worked in or run a small business and honestly don’t realise how important it is to the sustainability of that supplier to be paid quicker. Good, constructive communication, in language everyone understands, lowers barriers. Then put everything in writing so no one forgets what’s been agreed and there’s a lot less likelihood that time and money will be wasted, in trying to resolve disputes.

When bringing a new supplier into the fold, bigger firms can lower the barriers to getting paid. They can explain the processes, give a person as a point of contact, and if necessary, physically help a supplier to onboard to any technical system they use. Not only do the suppliers stand a better chance of being paid but the customer reduces the number of calls they have to deal with to help a disgruntled supplier get paid once the payment is overdue and relationships are frayed. The customers really can help get the necessary information to the suppliers in a way that even accountants and bookkeepers can’t. If you think you can’t afford to do better onboarding, try affording disputes.

And while you’re doing all that think about how your processes could be improved for everyone. It will all help the bottom line. Do you really need 20 steps in your approvals process? It was probably set up in the days when the only option was to get the signatures of all the people in the chain on a single piece of paper, but there are inexpensive ways to reduce those barriers with technology even if you can’t afford all singing, all dancing CRM systems. Reducing the barriers reduces the costs and helps the cashflow management of both customers and suppliers.

Customers are probably saying I’m asking them to do all the heavy lifting here but I’m saying that from what firms are telling us there’s a lot of time wasted in payment delays and barriers that are there because they have been there for a long time, and ‘this is the way we’ve always done it’, or because no one is willing to invest in improvements. Reducing the barriers doesn’t just mean the suppliers get their money quicker and are treated better and so, more loyal and able to invest in improved products and services. It means less time and effort on the part of customers dealing with inefficient processes and irate suppliers on the brink of insolvency. #EveryoneBenefits.