Wed Sept 26 2018
Settling invoices the traditional way can be costly and inefficient.
That’s why digital payment technology is becoming popular with more businesses – it offers a way to streamline the procurement process, increase efficiency and cut costs across your organisation, saving you time, money, and stress. And that’s just the tip of the iceberg.
Whether you’re using BACS, paying by PO numbers or simply dealing with a supplier that only takes bank transfers, procurement using traditional payment systems can be a headache.
In comparison with digital payments, the time involved to manually process an invoice can be substantial, from setting up a supplier, to raising a purchase order. A white paper by document management company Cleardata estimates that the cost of paying a single invoice could be up to £50. For a business handling a large number of external suppliers these costs can quickly add up.
Digital payment technology such as Barclaycard’s Precisionpay can help you cut down on these costs and focus on streamlining your supply chain.
If your business still hasn’t adopted digital payment technology you could be slowing down procurement. Paper invoices are slower to process than digital payments and can incur additional admin costs, such as postal costs and the man hours taken to handle reconciliation of payments. With digital payments this process is automated - from the payment of suppliers to the reconciliation process.
Setting up a new supplier can also incur costs – the time it takes to find out how to set them up on your payment system, process their paper invoice, or find a workaround can often be more hassle than it’s worth. This is particularly true of businesses handling large numbers of new suppliers for relatively low-value invoices. Digital payment technology is a cost-effective way of automating these processes, which takes the stress out of setting up new suppliers.
A lack of automation in many accounts payable departments can also mean that paper invoices have to be physically routed - adding to the risk that they get lost along the way. Late payment of invoices can incur further costs, as well as damaging relationships with trusted suppliers.
Research published by Deloitte suggests that there is ample space for more businesses to move away from paper invoices and instead take up digital payments as part of a procurement cost-cutting strategy. According to their research, only 23% of companies say that digital technologies (PDF, 2.24MB) are being “completely” used to facilitate payment processes.
Could your company be missing a trick when it comes to data collection? Procurement that uses traditional payment systems is unlikely to offer the kind of detailed record retention that modern payment technology can offer. Digital payments can provide companies with valuable data about the procurement process that gives you a better oversight of day to day spending and cash flow.
That can come in handy when you need to talk to suppliers – or negotiate with them.
You’ll go into conversations with suppliers armed with facts and figures to help you secure the best possible outcome. Virtual cards, a form of digital payment, can also help you to collect more detail about transactions that can be useful when it comes to streamlining your procurement processes.
Digital payments don’t just give businesses a clearer picture of daily cash flow – they can also improve working capital by opening a new line of credit. With Precisionpay, suppliers will be guaranteed payment within 3-4 days and you’ll have an extended interest free credit period before settling. This means being able to pay suppliers quickly and maximise your company’s ability to invest and grow, while staying on top of costs.
If your procurement team still relies on traditional payment methods, then it’s likely that the business is incurring unnecessary costs and wasting time on manual reconciliation. Digital payments, such as virtual cards, offer a flexible, efficient way of paying suppliers for all business costs, and should be included as part of a forward-thinking payments strategy.
Go to our supplier payments hub to learn more about Barclaycard's virtual card and digital payment solutions.