There are numerous reasons that smaller and mid-tier suppliers complain about being forced to do business the way their customers want them to. This mandate is increasingly forcing small and mid-tier companies to manage information online regarding their products, accept online purchase orders, and submit invoices electronically – all without a clear, quantifiable business case for supplier benefits in many cases (and even potential added costs, such as supplier network fees).
For more detail on some of these challenges, see the first post in this series: Why Small Suppliers Hate E-Invoicing and eProcurement. In this third and final post in this analysis, I thought it would make sense to suggest some lasting remedies to the push-back from SMB suppliers when it comes to participating in P2P environments—rather that offering up solutions to the acute heartburn these requirements can create (see: When eProcurement and E-Invoicing Give Small Suppliers Heartburn).
Perhaps most important of all, getting smaller and mid-size suppliers excited about participating in network commerce through customer eProcurement and e-invoicing environments will require changing the paradigm of these systems from one of focusing on buy-side efficiency to one of specific and directed supplier benefits. This can be realized almost immediately rather than being tossed out as a potential benefit. Here are some ideas about what some of these benefits might look like:
- Making on-boarding a timeless, simple, and painless process (not the general hassle it usually is)
- Having accurate visibility into invoice status and payment schedules all the time, with information that is updated daily (not just on a weekly or similar batch-basis, as so many P2P environment are)
- Not forcing suppliers to log on to a portal to submit an invoice that must be uploaded or re-keyed, but having direct integration into the financials application (e.g., QuickBooks, Dynamics)
- Putting early payment discounting and financing opportunities front and center as part of the value proposition (and having consistent liquidity through a network or a buyer’s P2P environment to support early payment at reasonable terms)
- Providing interfaces with banks and lenders that, based on supplier opt-in permissions, make it easier to borrow on better terms based on visibility into invoice status and what we might term “e-collateralized” receivables. If banks and lenders can take risk off the table through this type of visibility and make lending requirements more attractive and/or less onerous, many small suppliers will become quite excited about the prospects of integrating through P2P environments just for this reason alone.
- Enabling suppliers to take advantage of the systems that customers are using for invoicing and even procurement (e.g., participating in leveraged buying programs that offer discounts or rebates based on participation in a network).
This list only begins to explore the type benefits that will get SMB suppliers excited about participating in P2P environments. For all of these areas, we need to change the orientation of P2P systems, eProcurement, e-invoicing, and supplier network/platform environments from one of focusing primarily on buyer benefits to one that also prioritizes quantifiable supplier outcomes.