Ninety-two per cent of organisations are facing significant risks, including non-payment, legal disputes, and reputational damage as they do billable work without the assurance of being an approved supplier as Taulia, the capital management solutions provider, reveals its latest research.
The research, done in partnership with payments provider, Mastercard, found that without clear terms as approved suppliers, firms lack financial protection and legal recourse. Taulia also revealed that 20 per cent of businesses report they ‘always’ do billable work without the assurance of being an approved supplier, while 29 per cent ‘usually’ do this.
When asked about the most painful aspects of starting a business relationship with a new customer, registering on a new supplier portal was the most commonly cited problem (50 per cent), mentioned twice as often as due diligence (24 per cent).
Obstacles like data-sharing issues, system complexity, and difficulty integrating with existing Enterprise Resource Planning (ERP) systems contribute to this frustration and often lead to delays in payment for new suppliers.
For new suppliers, simplifying these processes is crucial. Payment solutions with a seamless ERP integration can play a key role in making the payment quick and frictionless. One example of a solution like this is Taulia’s Virtual Cards. However, despite these benefits, only a small percentage of supplier payments are made via virtual cards, according to survey participants, with wire transfers remaining the dominant method.
Overcoming obstacles
Danielle Weinblatt, chief product officer, Taulia comments: “Our report has highlighted that suppliers are looking for payment methods that are reliable and offer near-instantaneous payments to their accounts. It’s also become increasingly clear that payment innovations should not just focus solely on the buyers, but also must incorporate the needs of the suppliers.”
Rebecca Meeker, senior vice president, B2B partnerships, Mastercard comments: “Suppliers want visibility and transparency as to how they are getting paid. They also want the option to be able to accelerate payment, which the virtual card provides. Suppliers need clear visibility into approvals and direct deposits to manage their cash flow effectively, and traditional paper checks only exacerbate issues with reconciliation.
“By optimising for suppliers, the payments industry can provide clear tracking of receivables and empower suppliers to make informed decisions. Forecasting based on past payment history can transform raw data into actionable insights, thereby giving suppliers the confidence they need to engage in pre-contract work.
“Furthermore, with only a small percentage of supplier payments made via virtual cards, there is clearly a huge opportunity for suppliers to take advantage of their faster processing times, better control over spending, and improved security.”
