How To Help Your Vendors Embrace Digital Payments
by The Ottimate Editorial Team
In the bustling world of business, strong relationships are the key to keeping everything running smoothly. One of the most important connections a business can foster is with its vendors.
But how can you strengthen the bond with your vendors and ensure an arrangement that benefits you both? The answer is simple: How you handle payments. Timely and accurate payments are essential to strengthening your vendor relationships — and paying them digitally can help.
Cutting Checks is No Longer Considered “Best Practice”
Checks used to be the norm when it came to paying vendors. But with electronic payments gaining popularity, cutting a check is no longer your best option.
Paying by check takes time and costs money. You not only have to write the check and get it signed by the appropriate person, but you also need to have the supplies needed to send it — like envelopes and stamps.Once you mail the check, you then have to trust the postal service’s unpredictable schedule, which can be slow and unreliable. .
Embracing digital payments not only streamlines the process, but also brings many benefits. So, how can you convince your vendors to embrace this digital shift?
How Vendors Benefit from Electronic Payments
To get your vendors on board with digital payment, you need to showcase the benefits they’ll receive. Some of the key advantages of transitioning to electronic payments include:
- Reduced Processing Fees: Electronic payments are cost-effective, often eliminating the processing fees, supply costs, and manual labor fees associated with paper checks.
- Security: Digital payments, like virtual cards, offer more security, which keeps your information safe and reduces the risk of fraud.
- Faster Payments: Digital payments are faster, so your vendors receive funds in as little as one to three business days — much faster than sending a check by mail!
- Transparency: Electronic payments provide transparency throughout the payment process, so businesses and vendors can easily track payments and fix errors.
- Convenience: Digital payments offer a convenient experience, making receiving payments efficient and hassle-free.
Why Haven’t Your Vendors Made the Switch to Digital Payments?
Despite the many benefits of electronic payments, many businesses still prefer traditional, dated payment types. In fact, a whopping 81 percent of companies still default to physical checks.
So, why the resistance to digital payments? The reasons can vary:
- They’re afraid of change. Some vendors may believe that paper checks are the status quo and are afraid of disrupting their existing processes.
- They want to avoid fees. Suppliers may choose paper checks to dodge credit card fees, unaware of the hidden costs associated with processing checks — including check stock, envelopes, and stamps.
- They’re concerned about security. Vendors accepting only paper checks might think electronic payments as less secure. But that couldn’t be further from the truth. Electronic payments provide an added layer of security, keeping your information away from peeping eyes and potential fraud.
- They think making a change will be too complex. Some businesses feel that transitioning to electronic payments will be too much work, especially if they already have a working system. While setting up any new process can take time, once a payment automation system is in place, your vendors will actually start saving time.
- They’ve made incorrect assumptions. Some vendors assume that the companies they do business with prefer traditional payment methods. But what if that’s just an assumption? Letting your vendors know that you’re open to electronic payments puts them at ease about switching to electronic payments.
If your vendors are hesitant to be paid electronically, you may want to have a candid conversation about the value of digital payments. Show them it’s a win-win for everyone involved by highlighting the benefits and security of electronic payments.
How To Convince Your Vendors To Accept Electronic Payments
Despite the many benefits, some vendors may be harder to convince than others to adopt electronic payments. Developing a clear strategy can help.
Here are some steps to consider in your approach:
- Identify Candidates: Examine your spending to identify which of your current vendors would benefit from electronic payments.
- Segment Vendors: Categorize vendors into groups based on their likelihood to adopt electronic payments (from “least likely” to “most likely”), and determine the best approach for each group. Some vendors may require a face-to-face conversation or phone call, while a simple email may be best for others.
- Engage Effectively: Implement a plan for each group, considering their preferences for communication and support. Leverage your existing relationships with each vendor to tailor your approach as needed.
- Provide Ongoing Support: Create a follow-up plan to support vendors after they enroll in your digital payment program.
- Analyze the Results: Regularly evaluate your digital payments program to identify opportunities for improvement.
Getting Started with Digital Payments
While traditional payment methods, like cutting paper checks, can slow down your workflow and increase the risk of late payments or fraud, digital payments offer a more efficient, reliable, and less time-consuming payment process for both you and your vendors.
Besides increasing efficiency, embracing electronic payments will help your vendors reap many benefits, including: faster and more convenient payments, fewer processing fees, stronger security, and greater transparency in the overall payments process.
The Ottimate Editorial Team
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