Some bigger firms are spending a lot of money on technological improvements that will be to the benefit of suppliers but only if the suppliers engage and comply with any new requirements. Big firms ask us what we can do to help.
On the other hand, we’re also being told by suppliers that their bigger customers are telling them that their systems have changed and that if they don’t provide x, y, and z on their invoices they won’t get paid. Messages like ‘No PO Number, No payment’ are getting suppliers hot under the collar. The suppliers want to stop the big firms demanding additional information.
It seems to us there’s a communications gap somewhere. Having talked to both parties here we can see one thing: everyone wants better technology to make payments quicker.
Imagine the CFO gets approval from the CEO to take a proposal to the Board making the business case for spending many hundreds of thousands of pounds/million of pounds on installing a new system. One of the arguments for spending the money (that could be used for something else important to the business like research and development) is that suppliers will get their invoices paid sooner and relationships with valuable and brilliant suppliers will be better thus guarding against losing them. The Board is initially reluctant but eventually agrees and approves the spend. The Board will subsequently want to know how well the system is bedding in and how it has improved payment practices.
If the response is that it’s not bearing the expected benefits heads will roll. How do both sides work together better to get the full benefits out of these new software systems as quickly as possible?
I may be wrong, but I suspect there’s more that could be done to communicate the changes and the benefits they will bring. Big firms tell us they let their suppliers know that change is coming, that there will be blips, that they will need additional information etc and keep suppliers in the loop along the way. However human nature is that we don’t always read or absorb all the information sent to us. The information being supplied by the customer will make sense to them because they’re steeped in the detail, but it may well go over the head of the reader. The supplier has several customers who all run different systems so there’s little chance that all the customers of one supplier will want the same information.
The supplier has an important day job and is putting a lot of effort into supplying the customer with their products or services. There’s not always enough bandwidth to take in the fact that in future you will need to get PO numbers to add to the invoice before it will be approved and paid.
Of course, there is a responsibility on the part of the supplier too to make sure all the information the customer needs is available so that the invoice is payable. Suppliers do have their role to play. The more effort there is put in at the beginning of the process, process change or relationship, the better will be the end result. Sadly the smaller you are the less likely you are to have people for whom these new systems and processes are familiar and for whom change is a walk in the park. It may be down to you alone to gather the information, work out how to comply with new or changing requirements and deliver payable invoices.
It takes two to tango.
Big customers: please make the communications as easy as possible to follow. Your smaller suppliers don’t have the people on hand who can make the changes you want at the flick of a switch. They will have questions and queries, requests for information or more time. You can build that into your systems. You may not be the only customer updating processes and requiring more information. It may also seem to the supplier that you’re simply making what was an OK system more complicated. People may not be resisting your changes, but simply be too bogged down in the everyday.
What more can you do to help? I’ve even heard of a big company CFO going to a tiny supplier and installing the necessary app onto the supplier’s phone so that he could use the new system and get paid quicker. OK. If you have 250,000 suppliers that sort of personalised service isn’t going to be possible but there may be simple things you can do to ease the transition.
Smaller suppliers: unfortunately, technology is not going to stand still. What seems to be complicating things is probably a good investment for the future. If you embrace the change, read the emails, follow the instructions, you may have a few headaches and late nights, but it will be worth it in the long run. If you get paid quicker, you’ll have the money to allow you to invest in your growth, productivity and future too.
Collaboration and patience ease transition.