To conclude our look at payment terms and accounts payable strategies (and our own personal experience as an SMB supplier to large, global companies), we offer up some advice for not losing control of contract and payment visibility with SMB and diverse suppliers while ensuring actual payment terms and maturities.
Here are five general tips:
- Ensure that contract negotiations and final terms (negotiating via procurement and legal) can be met by accounts payable. Sadly, this is not always the case.
- Create different accounts payable terms and program structures for SMB and diverse suppliers based on overall importance, value and risk to the business for given groups of vendors, as opposed to one-size-fits-all payment terms.
- Offer but don’t force card-based payment, which is a way that many SMB suppliers are effectively mortgaging their future cash flow to buy the house today (yet does provide one rapid payment method for those who needed to have a roof over their heads yesterday).
- Invest in a supplier management and P2P system that provides portal-based visibility to suppliers, including specific PO, invoice and payment details through a self-service interface that provides a level playing field of information.
- With card-based payment in place, provide reasonable discounting options that enable suppliers to get paid quickly without having to pay obnoxious card-like APRs. Here, we are well versed in the discounting and payment options offered by providers and networks like Taulia and Ariba. Both are sufficient. But offer something!
These five tips are just a start. And of course it’s critical to consider the reasons for (and how best to execute) greater procurement and accounts payable collaboration. For more insight into this topic, reference our recent Spend Matters PRO analysis (subscription required): An Opportune Time for Collaboration: Procurement and Accounts Payable.