By Jill Rosenthal, Sr. Director of Payment Optimization, MineralTree
While payments are an unavoidable cost of doing business, many accounts payable (AP) and finance teams have transitioned to digital payments to streamline the process and deliver important benefits to their organizations. In addition to big operational efficiencies, digital payments can provide valuable rebates through virtual cards. Paying digitally also helps companies strengthen their supplier relationships, which is increasingly important in today’s tenuous supply chain environment.
With these benefits in mind, many AP teams are racing to digitize their supplier payment processes. In its annual predictions, Forrester expects that the payments industry will get “the Hollywood treatment” in 2022 as companies ”lock in the benefits of digital payments, pivot to B2B payments innovation, and pursue further consolidation in the payments space.”
AP departments can accelerate their digital payment initiatives through ‘just-in-time supplier enrollment.’ The concept is common practice in manufacturing to cut down on waste by manufacturing and deliver goods or services just when they are needed. That same concept can be applied to payments, onboarding suppliers to accept digital payments from the time their first invoice is entered into the AP system. That way, buyers and suppliers can both take advantage of the benefits of digital payments from the start. In
The urgency to go digital
While checks have been a standard means of payment, they have long outlived their usefulness and have become too costly and time-intensive for many businesses. Checks can take weeks or longer to be issued and received, often resulting in payment delays, late fees, and unhappy suppliers. In addition, the labor needed to process checks and the hard costs of paper, ink, and stamps also makes them expensive. By contrast, every time a company makes a payment with a Virtual Card, they earn a rebate, which can quickly add up to turn AP from a cost to a profit center.
Checks are also fraught with fraud. According to the 2021 AFP Payments Fraud and Control Survey Report, check payment was the leading method associated with attempted or actual fraud, impacting 66% of respondents. However, as companies turn to digital payments, the incidence of fraud reduces significantly. In the survey, 34% of companies using ACH payments experienced attempted or actual fraud, while just 3% of those using virtual cards.
How just-in-time supplier enrollment works
With all the advantages in play, AP departments are eager to move their suppliers to digital payments. Unfortunately, this can often be easier said than done. Getting suppliers set up to receive digital payments involves identifying and reaching out to each one, collecting payment information and preferences, and taking them through the onboarding process. Most AP departments don’t have the time or bandwidth for this. In some cases, they can turn to an AP automation or payment service provider to take on the onboarding task and work directly with their suppliers. That helps, but it’s not enough on its own.
Most service providers will reach out to a company’s existing suppliers with an initial enrollment campaign and stop there. It’s also important to onboard new suppliers on a rolling basis through just-in-time enrollment. That way, companies maximize efficiencies, savings, and fraud protection from the start, while also ensuring that they are not leaving money on the table from Virtual Card rebates. If the payment service provider offers full invoice-to-pay automation, it will have ongoing access to all new suppliers from the moment their first invoice enters the system, so it can reach out to them immediately instead of waiting for the company to send that information periodically in batches.
Digital payments are the way forward for all types of organizations. The more suppliers a company can sign-on, and the quicker it can do that through just-in-time enrollment, the greater the cost savings, earnings, and operational efficiencies. For companies challenged by constrained supply chains, the fast-paced business environment, and workforce shortages, these benefits will be coming just in time.
Jill Rosenthal is responsible for the success and growth of MineralTree’s B2B payment solutions. As head of MineralTree’s Payment Operations organization, she leads the teams responsible for optimizing customers’ payments and providing value to their suppliers. She has over 20 years in the B2B payments industry. Prior to MineralTree, Jill spent 14 years at JPMorgan, where she held leadership and strategy roles in their commercial payments business.
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