Unlocking a world of payments possibility
Finding solutions to supply chain disruption, increased costs and inflation are all front of mind for businesses right now. Fortunately, the solution could already be close at hand.
Rob Tuckwell, Director of Partnerships and B2B at Barclaycard Payments
In-depth data analytics can give companies a better understanding of everything from how suppliers like to be paid to how payments can be structured to best protect cashflow. The task now is for businesses to turn existing payments data into a smarter payments strategy.
We spoke to Rob about why a smarter payments strategy could be the answer to some of businesses’ biggest supply chain challenges right now.
Why do businesses need to get smarter with their payments?
You only have to look at the macro economy to see why. Interest rates are rising. Inflation is at record levels. Disruption to global supply chains is rife. Fortunately, an optimised payment strategy can help businesses navigate some of that disruption and ultimately drive down costs – for them and their suppliers.
What’s the starting point for optimised payments?
In a word, data. It gives a business the foundation they need to better understand the buyer-supplier dynamic. By getting to grips with things such as invoice numbers, total spend, category of spend and working capital cycles, businesses can start to unlock the potential of payments.
How can Barclaycard Payments help businesses use that data?
Most businesses are sitting on a huge wealth of potentially useful data, but they need to turn it into meaningful insights. Barclaycard Payments can help give them the bigger picture of their supply chain by delivering:
- Accounts payable (AP) data and third-party information: AP data helps us understand the buyer-supplier dynamic. We supplement that data with third-party information (e.g. working capital cycles, suppliers’ profitability and the role a buyer plays in that relationship).
- Recommendations: based on these insights, we can then make recommendations on how to optimise payments and offer value across departments. For example:
Insight into how suppliers and buyers are working together to help boost cashflow
Category management of suppliers to help strengthen relationships
Invoicing optimisation to help ensure a frictionless process
How can data analytics help a business understand their supplier payment profile?
To develop a smarter payments strategy you need to understand your suppliers. Data analytics allows you to understand the transactional volume and value of payments from each supplier, which in turn allows for smart segmentation. Suppliers tend to fall into one of three categories:
Generally high-value transactions
Characterised by the number of transactions occurring between buyer and supplier
More sporadic, one-off transactions
Each of these groups has very different characteristics, and each presents very different challenges. A one-size-fits-all strategy won’t do.
How else does data analytics help businesses?
Data can also help businesses figure out how important they are to suppliers. You might be a large corporate that represents 50% of a supplier’s business, or you could be one of many businesses buying from a supplier. Either way, understanding the strength of that relationship is crucial when negotiating.
The goal – especially for large corporates – is to become the buyer of choice. Paying suppliers on time is essential for fostering and maintaining closer relationships. It also mitigates against risk in the supply chain by reducing unnecessary pressure on suppliers.
Why are supplier payments and timings so important?
Getting supplier payments and timings right is crucial. UK regulation states that corporate suppliers must be paid within 60 days and SMEs within 30 days. If you don’t know which supplier you’re paying when, you risk non-compliance.
Of course, buyers and suppliers have different ideas when it comes to payments. Buyers want to extend terms as long as possible. Suppliers want to be paid as early as possible. Understanding that dynamic and optimising when you make payments can lead to better relationships with crucial businesses across your supply chain.
Every business needs a smart payments strategy; it makes good business sense on so many levels. A more streamlined process makes you more efficient, saving time and money. It helps solidify stronger buyer-supplier relationships, and it can deliver improved working capital for both buyer and supplier.