With procurement representing an average of 60% of revenue for European companies, the importance of supplier relations must not be underestimated.
Building a smooth relationship with partners is clearly a strategic role for organisations. Handling the relationship effectively also means that the finance function must meet new challenges, such as real-time management, respect for payment deadlines, requirements for due diligence, productivity for accounting and procurement departments, loyalty, and more.
High-quality relationships are now a sign of performance and risk management. Relationships therefore play a central role in the Procure-to-Pay process. Here is an overview of the situation.
Making it easier to exchange information
Did you know that accounts payable teams spend nearly 25% of their time answering questions from their contacts? This includes people asking about invoice payment status, requesting duplicates, and more.
Beyond simply seeking optimal productivity, organisations have also started to understand the benefits of being proactive with their partners. The idea is to be able to share all relevant information with them at any time. What is the impact? Supplier satisfaction, which is crucial in many highly competitive industries.
Accountants spend 1/4 of their time
answering supplier questions
Ardent Partners’ Accounts Payable Metrics that Matter in 2021
One way to help resolve these issues is to simplify exchanges. And the implementation of a Procure-to-Pay digitalisation solution enriched by a supplier portal is therefore beneficial.
Suppliers, who can freely track invoices, check contracts, and more, benefit from easier real-time access to all documents and information exchanges that concern them. This transparency gives rise to a trusted relationship, one that can really turn your suppliers into partners, engaging them naturally in healthy long-term collaboration.
On top of that, let us include functions for uploading documents such as invoices, bank details, and legal files, as well as entering invoices online, and you can easily understand just how much the portal can help accountants save precious time while improving the quality of their reference data.
A portal with a Supplier Relationship Management (SRM) integration truly helps unify supplier relations thanks to the ability to share and access relevant and up-to-date information at the right time.
Alain Alleaume, Procurement Expert, Altaris
Managing risks and compliance
The supplier relationship context is increasingly regulated, with issues such as the fight against undeclared work, corporate due diligence (CSR), Sapin II law fighting corruption, and Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT). Any failure to comply with these obligations can lead to substantial financial penalties and have negative impact on the organisation’s reputation.
Ensuring regulatory compliance and controlling risks therefore requires you to have thorough knowledge about your suppliers (Know Your Supplier – KYS).
It is not always that easy, especially given the fact that supplier information is often kept in different parts of your organisation.
In this context, it is essential to gather all relevant data and documents, ensure the validity and authenticity of information, and centralise it within reference databases shared by finance and procurement departments.
Know Your Supplier
Procedures exist for collecting reliable and up-to-date documents and information to validate supplier identity:
certificate of incorporation, certificate of social coverage, list of foreign workers from outside the EU or attestation of non-employment of foreign workers, IBAN, civil liability insurance certificate, certifications, charters, licenses, and more.
The effort may be complicated and time-consuming, but it may also be facilitated through automation solutions and the implementation of a portal with SRM functions such as referencing, contract and legal document management, e-sourcing, and supplier evaluation.
Fraud is a reality: the number of fraud attempts doubles every year, now affecting 7 out of 10 companies. When targeting the Procure-to-Pay process, fraudsters have a clear preference to attempt fake-supplier scams. That is THE number 1 risk, representing 54% of all known fraud attempts.
represent 54% of all fraud attempts
Euler Hermes – DFCG survey, 2020
It takes the right tools to protect an organisation from the risks of fraud. To be effective, controls must be systematic and not just based on sampling; performed upon document reception, not later; applied to both data and documents (in more than half of all cases, fraud is based on a document such as a falsified invoice or false payment orders).
It has now become indispensable to have a P2P digitalisation solution integrating robots that detect these types of fraud. That is exactly what ITESOFT includes in its Streamline for Invoices solution, leveraging unique technologies developed with leading laboratories, combining exclusive image analysis algorithms (IA, document alteration detection) and data consistency checks (amounts, business ID, IBAN, intra community VAT number…).
Discover Streamline for Invoices
The most comprehensive Procure-to-Pay solution
Managing the relationship in real-time
67% of CFOs surveyed said that looking for flexibility in financial steering was their priority in 2020. Having immediate access to exhaustive, high-quality data is essential for completing their dashboards and managing supplier relationships effectively.
Real-time data-driven management involves eliminating paper and manual processes. The prerequisite is therefore to digitalise the P2P process.
Benefiting from visibility in real-time, organisations regain control over payment deadlines.
29.9 M£ in 2020:
total amount of late payment penalties for 182 companies
DGCCRF (General Directorate for Competition, Consumer Affairs and Fraud Control)
Paying your commercial partners on time is the foundation for any good relationship. It is also a requirement that organisations must respect: bad payers in France can be fined up to 2 M£, and have their name published on the DGCCRF’s “name & shame” website.
By leveraging data intelligence faster thanks to process digitalisation and automation, companies have full control over the management of their payments. In doing so, they ensure supplier satisfaction while also increasing security for their financial and reputational risks. Even better: according to Ardent Partners, 52% of those companies use data to renegotiate contracts or benefit from early payment discounts.
It is easy to see that “thinking about supplier relationships” is far from being insignificant. On the contrary, it is a guarantee of getting the most out of your Procure-to-Pay digitalisation project and being able to work towards greater productivity, fluidity, and security.
White Paper: 5 Reasons to Digitalise the Procure-to-Pay Process