B2B Payments

Getting Vendors To Hear The SME Voice


There may be what some consider an epidemic among small businesses today: the struggle to manage cash. The latest research reveals a troubling pattern, to say the least.

One small business lending firm, BlueVine, found this month in its Small Business Survey that the majority of SMEs are financing themselves to grow their businesses. Almost half of small business owners admitted going without pay just so they can pay their bills, while cash flow management-related issues ranked at the top of their lists of biggest concerns.

Collaborating with suppliers can make cash management challenges worse. Analysis issued by iPayables earlier this month found that accounts payable professionals are frustrated at facing friction when trying to do their jobs, often due to mistakes that vendors make when submitting bills, leading to delayed payments.

While processes like payroll and investing in equipment prove a headache to SMEs that are already struggling to manage cash flow, supplier management often manages to find itself at the top of small businesses' lists when it comes to the factors behind poor cash management.

Bob Wieden, the president of Business Discount Exchange, says that vendor-related money problems for small businesses aren't exclusively emerging in the accounts payable department. Rather, they often come before a sale is even made.

"The biggest issue is that small businesses, even though there are 28 million of them in the U.S., they get treated pretty terrible, especially when it comes to any kind of pricing from vendors," Wieden said in a discussion with PYMNTS. "They're kind of preyed upon."

For SMEs, he explained, it all comes down to dollars and cents; a small business owner may be familiar with and capable of the process of vendor negotiations, but the lack of order volume and size alone forces suppliers to charge more for products and services that larger corporations would receive a discount on.

"They look at it as market share," Wieden explained of how vendors assess a potential sale to a small business. "They say, 'well, this guy's pretty small. Is it worth my time to deal with them?'"

The executive added that SMEs are well-aware that they're not getting the best deals. "When you see your pricing, you know immediately you're going to get worked over," he said. "You're going to get a high price."

His company acts as a channel through which small businesses can join together and build up collective bargaining power to access the same kinds of discounts from suppliers that larger companies often enjoy.

"We just decided to change the paradigm a little," Wieden explained. "If we all join together, and we had more buying power, we can get these guys in line to treat us better and get better pricing."

Wieden is blunt when he discusses the way he sees small businesses being treated by vendors in the U.S. While a supplier may have economic incentive not to offer better deals to SMEs, the executive said he and his small business-owning peers see that small firms simply aren't being treated fairly.

But the service Business Discount Exchange provides isn't exposing and worsening the tension between buyer and supplier. In fact, said Wieden, it's doing the opposite.

"It hasn't been easy, because this is a new concept," he admitted of the solution he's put onto the market for SMEs. "What we found out – and this is the 'aha moment' — is that some of the companies we're dealing with, their executives came out and said, 'you know what? We don't know how to speak to small businesses anymore. You're right.'"

Working with vendors to be able to negotiate with small businesses isn't just helping entrepreneurs receive more power with vendor collaboration and access more affordable products and services. Wieden explained that it's also helping these suppliers to realize that they are missing out on significant revenue streams by not working strategically with small businesses.

The executive explained that suppliers often feel they don't have a way to communicate and reach small business owners the way they once did. But they also realize that they need to change in order to access the massive volume of cash that SMEs collectively manage.

"And it's a lot of businesses they're dealing with," Wieden said of the massive small business population in the U.S. "The executives in sales and marketing, they're going, 'yeah, we need to get into that market.'"

Business Discount Exchange recently revealed plans to scale up, and Wieden explained that this strategy will include efforts to get more businesses on board with the process. He also said he plans to focus on geographical markets to help small businesses in certain regions of the country be able to better work with local, smaller vendors.

It's possible that, by providing small businesses the power of collective bargaining, this ability to access better control over vendor deals could expand to other business processes – like SMEs having greater power to convince suppliers to be paid by a commercial card, for example.

Regardless, Wieden said enabling small businesses to band together and encourage vendors to work with them (not against them) is good for everyone in the supply chain.

"I'm basically telling them, 'we can help you talk to that level. We can service them better. Let us be that conduit to make that happen,'" he noted of how Business Discount Exchange convinces suppliers to participate with these small business groups. "And that resonates, because they're not going to put a lot of resources into trying to do it. But they see that, boy, that could be a hell of a revenue stream."



Banks, corporates and even regulators now recognize the imperative to modernize — not just digitize —the infrastructures and workflows that move money and data between businesses domestically and cross-border.

Together with Visa, PYMNTS invites you to a month-long series of livestreamed programs on these issues as they reshape B2B payments. Masters of modernization share insights and answer questions during a mix of intimate fireside chats and vibrant virtual roundtables.

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