Maintaining Smooth B2B Transactions: Five Strategies to Prevent Late Payment Issues in Business Relations
Maintaining Smooth B2B Transactions: Five Strategies to Prevent Late Payment Issues in Business Relations
Dmytro Spilka is the head and creator of Solvid.
One of the most harmful aspects of overseeing supply chain operations involves not settling supplier bills within the agreed timeframes. This has a significant impact on cash flow, investment opportunities, and partnerships throughout the chain, with the overall cost of late payments often surpassing financial statements.
In the United Kingdom, the cost of late payments to small businesses has doubled over the past two years, reaching £1.6 billion by the end of 2023. Smaller organizations pay an average of 6.1 days late during the final quarter of the year.
Late B2B payments can cause major disruptions to supply chains and permanently harm supplier relationships. To prevent this, let's explore five strategies to keep your supply chain operating smoothly without harming your business:
1. Foster strong relationships.
Although technology will be integrated to speed up internal processes and guarantee on-time payments to suppliers, nothing beats the importance of maintaining a personal touch in maintaining a healthy B2B relationship with your suppliers.
Set aside time to communicate with your suppliers and build solid professional relationships with all parts of your supply chain. This will make it easier to be informed about any issues or missed payments in a quick and stress-free manner.
2. Utilize account automation.
Automating your accounts receivable and accounts payable processes can simplify multiple payment procedures to make your responsibilities more manageable and clear for your accounting department.
Automation tools can help send electronic invoices and reminders, reduce human error in payment processes, and simplify client billing. These technologies can also provide your finance team with real-time insights to help track invoices.
Using a more proactive approach to payments makes it easier to follow up on invoices or investigate missed payments. If something seems awry, you can then contact the client or relevant department to ensure payment.
3. Diversify your suppliers.
Relying on a single supplier can increase your exposure to supply chain disruptions, potentially causing slower deliveries and strained relationships when any inefficiency arises.
Building a larger network of suppliers can help you overcome unexpected circumstances that could impact deliveries and subsequent payments for goods.
By diversifying your supplier base, you gain a variety of backup options to try in case something goes wrong in the delivery process. Different suppliers will have distinct invoicing processes and payment acceptance methods, and you may find alternative suppliers in the future due to their smoother B2B payment processing.
4. Implement reminders.
Reminders can be an effective tool for managing the timely flow of payments.
Maintaining consistent communication with your chain is crucial for ensuring that no check-ins are missed and emerging issues are quickly resolved before there is any delay.
If your chain consists of numerous suppliers and industry players, managing so many moving parts can be challenging. Fortunately, there are numerous platforms to assist with this, helping to streamline payment processes and minimize delays or the need to delegate payments to other teams.
Incorporating pop-up notes as a key function of your POS system can help your small business frequently check in with suppliers to address any emerging issues that may impact timely payments.
5. Explore alternative payment options.
Meeting supply chain payment obligations can be challenging at times. Fintech solutions are rapidly evolving to help, with buy now pay later (BNPL) at the B2B level being an emerging form of payment processing that can bolster businesses' confidence in making on-time payments to suppliers.
The use of BNPL benefits B2B operations relying on incoming payments to maintain necessary cash flow for paying their providers on time.
Achieving Sustainability
Delayed payments are a significant source of inefficiency in supply chains, but advancements in technology are breaking down barriers to missed supplier payouts in a manner that supports strong relationships and efficiency throughout the chain.
By preserving trust throughout your supply chain, you can ensure the success of a sustainable chain that promotes overall operational efficiency for your business.
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Dmytro Spilka, the head and creator of Solvid, could potentially implement strategies to improve supplier payments, such as utilizing account automation or diversifying the supplier base, to benefit his company's supply chain operations.
To improve their strategy for timely payments to suppliers, businesses like the one led by Dmytro Spilka of Solvid might consider exploring alternative payment options, such as using buy now pay later (BNPL) solutions, which can improve cash flow and ensure on-time payments.