74 percent of businesses state that convincing suppliers to accept electronic payments is the top barrier to their adoption (Association for Financial Professionals). So, while there are many reasons to utilize virtual payments, businesses are skeptical about their key trade partners collaborating on the switchover. But is this perception true? Do suppliers really resist e-payments?
Data actually shows that suppliers are more open than ever to alternative forms of payment – Ardent Partners revealed in 2015 that 52% of suppliers were willing to accept electronic payments. Perhaps the difficulty with converting suppliers has nothing to do with the digital payment rails themselves, but rather the manner in which they’ve traditionally been pursued and encouraged to make the shift away from paper checks.
Many e-payments providers will reach out one-time to try and enroll suppliers in virtual payments. They conduct an initial analysis of your vendors to identify the accounts with whom you transact the most, and then contact this population via email, letter, or phone. These single requests can be easily forgotten or lost in the shuffle of day to day activities.
Ultimately, a change such as this will require repetition. Several communications are needed if suppliers are to fully understand the benefits of digital payments, have an opportunity to ask questions, and decide to accept them. If your payments provider is willing and able to conduct multiple strategic and well-conceived recruitment campaigns, your likelihood of success is much higher.
It’s also important that your payments provider not maintain a “one-size-fits-all” mentality or employ any coercive or deceptive tactics when approaching suppliers. Rather, they must recognize that electronic payment adoption depends upon very powerful and customized messaging developed in conjunction with you, the buyer, and that suppliers deserve flexibility and collaboration. Best-in-class solutions providers will not stop enrollment once they’ve migrated just your top tier of suppliers to Virtual Cards. Instead, they’ll win over successive groups with strong value propositions, counterarguments to vendor objections, and an arsenal of payment options. Suppliers who feel like a valued part of the equation because someone has taken the time to understand their concerns or because they’re presented with choices as to how they interact with their customers will be far more inclined to buy-in to the e-pay proposition.
Suppliers deciding to move away from paper checks often have no effective tools at their disposal to help make the process easier. So, not only are they being asked to alter their standard way of accepting payments, but they’re being tasked with doing so with no infrastructure to support it. There is little attention paid to what their user experience will be. They’d be much more enthusiastic about enlisting in the new payments program if they had a way to self-enroll and easily manage their own information on an ongoing basis.
Intelligently designed payments solutions will simplify and streamline business functions for suppliers, such as delivering detailed remittance information electronically to ease reconciliation. If they’re truly supplier-centric, the provider will offer a host of other value-add functions through their solution. Imagine how suppliers would respond if they were being presented with a web-based tool that not only allowed them to access all their relevant payment details, but also facilitated the other interactions they need to have with customers such as submitting invoices and managing compliance information.
There is a perception that suppliers will object to accepting virtual payments. While you may find you have some holdout vendors who refuse every option except paper checks, you can also partner with a payments provider who recognizes there are ways to innovate on the supplier experience to make the transition more manageable, appealing, and feasible.