When It Comes To B2B’s Missing Invoice Payments Problem, Data Works Better Than Trust

As much as the pandemic has changed the way we all do business, it has also underscored how vitally important it is to have a solid working relationship to ensure B2B shipments, processes and payments keep flowing — especially when conditions are less than optimal.

While mutual trust is still at the core of most retailer-supplier relationships, Michael Rabinowitz, CEO of supply chain and business analytics firm CoEnterprise, told PYMNTS many of the late fees and chargebacks that arise from these complex, big-dollar relationships are often unnecessary.

“Something that is a challenge in industry is that very often, manufacturers do not know if the retailers have actually received an invoice,” Rabinowitz said, and that’s important “because net terms do not actually start until the retailer physically receives the invoice.”

For example, he said, imagine you were a furniture manufacturer who has delivered a load of chairs to a retailer, on time and as requested. You know the retailer has received the chairs, stocked them, and begun to sell them, so you send them an invoice so you can get paid.

The problem, Rabinowitz explained, is that “I might not know if that invoice has been received by the retailer — and this happens a lot — because until I’m supposed to get paid or realize that I haven’t been paid,” there’s often no way of knowing that this critical step in the B2B payments process has been checked off.

“And then my AR [accounts receivable] team calls the retailer and says, ‘You’re late with payment,’ and then they say, ‘Well, we haven’t received an invoice yet,’” and it goes from there.

It’s not a matter of trust being broken between two business partners as much as it is a breakdown in communications that can easily be solved preemptively to the benefit of all parties involved.

The Data Fix

Not surprisingly, CoEnterprise’s newest software platform addresses this exact problem, and several others, by enabling a real-time, multi-faceted data interface that allows all participants in the supply chain process to see what’s in-transit, been delivered, invoiced and due.

“So, there is a lot of trust, but there’s also a lot of overhead in managing the process,” Rabinowitz said of the old but still common paper invoice, check and phone call method being used in many B2B relationships.

While some large retailers have web portals that allow suppliers and vendors to go in to check and see which of the documents within the supply chain have been received, including invoices, Rabinowitz said it is still “an incredibly manual process.”

That is, compared to the firm’s digitized Syncrofy system that he said, “sends signals on both sides of the relationship — when things are sent and received and when things have not been received within the agreed upon [terms] of the two organizations.”

For example, he said, CoEnterprise knows when an invoice is sent from the manufacturer to the retailer, and if that retailer doesn’t acknowledge it or pick it up, then the company sends a signal notification via email or in the app to the manufacturer to let them know right away that it wasn’t received so that they can follow up.

He said promoting transparency and visibility this way actually improves the buyer-seller relationship.

“Absolutely, information is power, and we are looking at every data point throughout the whole supply chain process that can help the relationship be more efficient and mutually beneficial,” he said.

Given the unprecedented attention that is currently being focused on supply chain logistics, and the need to streamline processes and develop seamless contingencies in advance of problems arising, Rabinowitz said this facet of B2B functionality cannot be overlooked.

“It’s critical,” he said. “We work across pharmaceutical, retail, manufacturing distribution, and now more than ever these relationships [have become] more important, and trust between the partners is more important.”