Electronic payments can speed things up, eliminating the slowdowns that come with printing and mailing paper-based checks. For a business with suppliers, though, convincing each of those vendors to change the payment types they accept can be challenging. They have their own business processes and see no reason to change them, especially when electronic payments can bring extra fees and investments in new software.
In some cases, however, suppliers reveal that they’ve never been asked to accept credit card payments. When businesses assume that their business associates won’t be interested in making any changes, they might be missing the opportunity to streamline operations. Here are a few things businesses can do to convince their suppliers to accept electronic payments.
Lead By Example
There are several reasons to automate your billing and payment processes, starting with the way it builds your reputation as an innovator. As you add new suppliers, you can ask if they accept electronic payments and, if a conversation follows, state from experience how great the switch has been for your business. You may even be able to recommend the perfect solution for them to consider once they do decide to change.
Set Up a Portal
One secure, access-restricted website can make it easier for all of your business partners to pay bills, request payments, and check the status of any pending requests. Simply letting your suppliers know that you have a portal may be enough to inspire them to manage payments through it. To further encourage them you could send a username and password that they can change once they log in successfully. If they can skip the sign-up process, they may be more likely to use a new system than if they have to input all of their information.
Pay the Fee
Some electronic payment methods come with a fee, which the supplier has to pay at the time of the transaction. This fee may be nominal when compared to the cost of processing paper-based payments, but vendors will need an extra incentive to accept that fee. One way to potentially prompt suppliers to make the move is to offer to pay an extra amount if electronic payments are accepted. Explain this by describing the amount you’ll save by paying this way and stating that the supplier will save money on their end, as well.
Demonstrate Cost Savings
Payers aren’t the only ones who save money by paying electronically. When a paper check arrives in the mail, recipients must log the payment and deposit the money in an account. Paper checks are slower, as well, getting in the way of a business’s ability to maintain healthy cash flow. One Deloitte study found that credit card payments reduce the cost of doing business by 49 percent, as suppliers spend significantly less time chasing payments and businesses are susceptible to fewer errors. You can use this as one of your selling points as you mention the possibility of switching to an automatic mode of payment.
Stress the Risk of Paper Checks
Since they’re submitted by mail, checks can be easily intercepted by someone with suspicious intentions. Your payment will be delayed and your supplier will be forced to ask you to cancel the check and issue a new one. Most importantly, though, suppliers may be forced to deal with bad checks from other clients unless they eventually transition to a more automated system.
It may be impossible to convince some suppliers to accept electronic payments. However, if businesses can find a way to talk them into it, it will pay off quickly. Once a supplier does agree to try it out, companies should make sure they pay quickly and efficiently to avoid sending the supplier back to checks.