A successful payment strategy begins with understanding the pros and cons of the available B2B payment options, and determining which option is best for different types of purchases and suppliers. Your organization can reap ample rewards, such as reduced costs, increased efficiencies, and minimized risk—to name just a few. Yet, hurdles to payment strategy success can occur at any stage: buy-in, development, implementation, and ongoing management. Where does your organization stand? Following are seven hurdles you might experience, along with suggestions for overcoming them.
1. Lack of Leadership
It usually takes an executive champion to spearhead change and, often times, senior management is focused on other business aspects, like sales. They might view the development of a payment strategy as unnecessary unless bills are not getting paid. See related content: The Payments Iceberg: Innovation and Realities.
To get their attention, create a compelling business case for a payment strategy—one that documents the costs and risks of what you are doing today (hint: start with your check usage), and how a strategic approach can literally pay off.
2. Turf Wars
Procurement and accounts payable (AP) fulfill important roles related to a payment strategy. However, we know that, in many organizations, these two groups fail to communicate. They might be possessive about their respective tasks, fearing job loss or job changes that take them out of their comfort zones.
Bring the stakeholder departments together, which might require a management-level initiative, to discuss their concerns and the benefits of a payment strategy. Everyone should be willing to support the organization’s goals over their own interests. Further, everyone will come out looking better through collaboration.
3. Lack of Knowledge
Even when your organization is ready to move forward with developing a payment strategy, it can fall short if internal knowledge is lacking. As noted in the introduction, understanding the pros and cons of different options is critical to success. Seek the necessary education and be receptive to hearing what different providers have to say.
4. Undefined Parameters
The process for divvying up purchases/suppliers can become random, leading to missed opportunities. Supplier X has requested checks, so we’ll keep them in that lane. Not so fast.
Identify the factors that should drive payment-related decisions. What is most important to your organization—cost, fraud risk, ease of use, etc.? Allow the priorities to guide the decision making. Further, do not automatically sign up new suppliers for ACH payments, which can interfere with card-related goals. Definitely incorporate ACH into your strategy, but do so mindfully.
5. Limited Resources
This hurdle can enter the picture at any stage, but is especially common once decisions are made. It might take a team of people to contact suppliers, update any existing payment-related contract terms, clean up the master vendor file, communicate the payment strategy (or payment policy) internally, etc.
Team members need appropriate time to work on the tasks, which could mean shuffling around their other duties at least temporarily. Document the roles, responsibilities, and a timeline. Keep everyone accountable. Also, take advantage of any assistance offered by your provider partners.
6. Lack of Communication
Failure is a notable risk if no one knows the payment strategy/policy exists. Strive to communicate various ways, including conducting brief meetings with departments. Keep the communication going through ongoing employee training.
Ongoing Management Hurdle
7. No Follow Up
All the work involved with implementing a payment strategy can go to waste if no one monitors whether things are going as planned. Do not keep paying a supplier via check if they agreed to an electronic payment method. Someone needs to be responsible for monitoring the progress and taking action if the strategy gets off track.
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About the Author
Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…