AP Solutions: A Spotlight on Suppliers


Automated solutions provider AvidXchange recently acquired BankTEL Systems. The move enables the BankTEL Systems’ customers to access AvidXchange’s suite of invoice-to-pay solutions, including AvidPay and its network of B2B suppliers.

As payments giants shift the innovation spotlight onto B2B transactions, developers of new accounts payable solutions are ushering in a growing trend: designing payment tools not just for the payer, but for the B2B supplier as well.

While corporate buyers would like to use commercial card products to make payments, due in large part to their ability to offer rewards and incentives, as well as lengthen payment times, vendors struggle to see the value in accepting the interchange fees and absorbing the costs of adopting their infrastructure and back-office processes.

The new Next-Gen AP Automation Tracker explores explores how new solutions are being implemented to make B2B payments smoother and more secure, with a focus on suppliers.

A new report suggests that companies’ focus on supplier needs — and enhanced vendor relationships — are strategic and mutually beneficial. A majority of businesses surveyed said they’re looking for longer-term supplier relationships today than they were five years ago. Companies are also increasingly concerned about how late payments to their suppliers might impact their reputation as a corporate customer, as well.

What Suppliers Want

Accounts payable (AP) processes are infamously paper-dependent, with PYMNTS’ July Payables Friction Playbook finding that 80.8 percent of firms still use paper checks to make payments. The next most popular methods are reimbursing suppliers via ACH (63.8 percent), credit cards (48.2 percent) and cash (45.2 percent).

AP firms aren’t necessarily giving suppliers what they want. Just 14.2 percent say their suppliers wanted to be paid through paper checks and only 6.2 percent prefer being paid in cash.

Suppliers had the highest preference for being paid via same-day ACH (25.9 percent).

Firms and their suppliers may not always be on the same page when it comes to how they want to pay and be paid, but most can agree that paper checks and cash are less than idea.

Analog vs. Automation Conundrum

Using data and automation isn’t a foreign concept for AP departments. A recent study found that roughly one-third (30 percent) are using data and financial intelligence to enhance supplier management.

For AP teams looking to put their plans into action, innovations in ePayables (such as AP automation) provides the way forward.

In an interview with PYMNTS, Uma Wilson, executive vice president and director of product management at UMB Bank, explains how the bank works to break the paper check’s spell, and educate businesses on AP automation’s advantages.

Wilson noted that some firms have delayed automation because they worry it will disrupt existing supplier agreements, yet what many businesses do not realize is that automated solutions can be easily implemented and beneficial to both parties. Some suppliers may even already accept electronic payments.

One party has to take the lead, however. Even if suppliers might be able to receive electronic payments, mail is still the leading way that they send their invoices (72.4 percent) and 43.8 percent are reliant on fax.

Wilson spoke of the importance of giving digital entry points for a supplier to go and enroll themselves on their own. “Don’t try to get payment instructions via emails, phone calls or letters. Rather, please have your supplier go into the designated digital channel we are making available for them,” she said.

Firms are also more likely to say they were sent eInvoices and/or use supplier portals to receive invoices for large payments than fax. While 34.5 percent received eInvoices for large payments, just 21.5 percent received invoices for large payments via fax.

Mutually Beneficial Value

Supplier portals and eInvoices also benefit businesses. Firms reported more satisfaction with digital payment methods’ speed, data security and supplier acceptance rates compared to those of checks. Nearly half (47.9 percent) of firms that pay their suppliers using digital wallets are satisfied with their convenience, 44.5 percent with their speed and 16 percent are satisfied because their suppliers prefer to be paid with them.

Automated solutions have the potential to cause significant shifts in how AP departments function, but few firms actually use these innovative tools. A recent survey found that only 19 percent of firms viewed their AP departments as “exceptionally valuable,” while 21 percent claim they offer “little value.”

Over three-fourths (76 percent) are using “smarter” systems to drive more efficiencies, over half (51 percent) are using deeper, more agile analytics, while one-third are exploring innovative platforms for processing payments.

In PYMNTS’ July Payables Friction Playbook, a majority (56.9 percent) expressed interest in eInvoice solutions to improve at least one area of receipt, approval or processing. Automatic order matching, which uses algorithmic tools to pair sellers with buyers at certain price points, also had fairly high interest (43.8 percent). One-quarter (24.6 percent) would like to implement artificial intelligence (AI) systems.