A Growing Roster of Providers Speed Supplier Payments — and Supply Chains, Too

Even three years after the height of the pandemic, even as economies have reopened fully, supply chains are still operating in a less than optimal manner.

And part of the issue lies with payments made to suppliers. Buyers want to hold onto cash as long as possible. Suppliers want to be paid as quickly as possible. Late payments or paper-based payments that take days to settle, or stretched payment terms, do two things: One, they mean that buyers may not get the goods they need in a timely manner; and two, they can have a detrimental impact on the suppliers’ own cash flow, which then has a negative impact on supply chains in general.

In the current environment, with cost of capital so high, working capital itself is increasingly in focus — because it’s working capital that proves to be the lifeblood of companies’ daily operations, and of longer term strategic maneuvering.

Automating and Digitizing B2B Payments

In recent coverage, PYMNTS noted that the modernization of financial management infrastructure includes automation of payments functions, amid a climate where payment delays — measured on a month-over-month basis — are on the rise across many industries. Retail, pharmaceuticals and energy experienced a 12-day average increase in the length of payment delays. The energy and construction sectors had it the worst, with an average payment delay of 77 days.

“Businesses have become increasingly reliant on supply chain financing (SCF) — a set of technology-based business and financing processes that yield lower costs and improve efficiency for parties involved in a transaction,” PYMNTS reported.

Elsewhere, in an interview with PYMNTS, Brett Sussman, vice president of American Express Business Blueprint and Banking, said that “midsized companies say their AP [accounts payable] departments are spending about 50% of their time collecting invoices and paying suppliers,” adding “that’s not the vision that they had for those departments.” He noted that automating processes and taking steps to limit manual data entry can help firms embrace early/timely payments practices — to the benefit of their suppliers.

“Early pay trade terms, such as the typical 2% discount if an invoice is paid in 10 days from the order date, are hard to get to, particularly with manual processes,” Sussman said. “That is, it’s easy to miss the 10-day deadline when paying manually. But the beauty of AP automation is that you can set it up to run so that your suppliers are paid in time.”

And as for the growing field of providers and solutions that are in the market to improve trade, and trade financing, a by-no-means complete roster follows below:

Just this week alone, HSBC debuted a trade finance offer to help clients pay suppliers. TradePay has been billed as a document-free trade finance solution that lets clients instantly draw down trade loans.

In doing so, companies can improve “their working capital while building stronger relationships with their trading partners,” HSBC Chief Product Officer for Global Trade and Receivables Finance Bhriguraj Singh said at the time of the announcement.

In addition , in yet another example, as businesses pay other parties to get the goods and services they need, BlueCart said in May that it has added a new vendor bill pay solution to its wholesale order management platform. The platform has handled payments related to transactions conducted on BlueCart for years. Now, with BlueCart Pay, it also enables clients to pay third-party bills like electricity, rent, gas and warehousing,

In a sign of a widening consideration of payment methods beyond the paper check or even commercial cards, buy now, pay later (BNPL) is emerging as an option for business-to-business (B2B) payments. PYMNTS “Buy Now, Pay Later Tracker®” examines how BNPL can simplify and accelerate B2B payments by staggering them over time and thus making them more affordable to buyers and more predictable for suppliers.