With supplier management frequently coming under public scrutiny, new research from Barclaycard Commercial Payments paints a picture of the changing dynamic between UK buyers and suppliers, and highlights some of the top ways for businesses to further strengthen their supplier relationships.
The value senior procurement leaders place on supplier relationships has changed significantly over the past five years, with nearly three-quarters (73%) of procurement leaders saying their supplier relationships are now more mutually beneficial than they used to be, and a similar proportion (76%) say they now communicate more openly with suppliers about business strategy.
The data reveals that the length of supplier relationships is also changing. Seven in ten (69%) procurement leaders say they are now looking for longer-term supplier relationships than five years ago, with six in ten (59%) saying that their supplier contracts last at least two years.
It’s clear that communication is also king, as almost half (48%) of procurement teams contact preferred suppliers at least once a week. However, there is still more to be done; when looking at how procurement professionals could improve their supplier relationships, the number one response was for businesses and suppliers to ensure they understand each other’s strategic priorities (32%).
Increased focus on late payments
The research found that six in ten (61%) businesses are more concerned about paying suppliers on time than they were five years ago, which could be as a response to increasing pressure from government to pay smaller suppliers within their agreed payment terms.
Procurement leaders are also more concerned about the reputational damage caused by poor supplier management, with 65% saying that they are now more concerned about the public perception of how their company treats suppliers.
Respondents said that they currently pay suppliers on schedule 73% of the time, on average. When asked why they might not meet the agreed payment terms, three in ten (30%) cited slow internal processes as one of the main reasons. The same proportion (30%) said that they would like to simplify their procurement processes to ensure suppliers are paid more quickly, in order to improve supplier relationships.
A new way for businesses to connect with service providers
To help businesses build and improve supplier relationships, Barclaycard Commercial Payments is launching Precisionpay Hub - a service designed to remove obstacles in the existing procurement process, making it easier for buyers and suppliers to interact and get the payment process and terms to suit them both.
Once a buyer has invited a supplier to join Precisionpay Hub, the supplier can request payment for goods and services directly through the platform. That payment request then goes through an approval process and, once approved, it is scheduled for payment using a Precisionpay virtual card or bank transfer.
Suppliers using the service will gain the opportunity to reduce days sales outstanding (DSO) by requesting early payment from the buyer in exchange for a discount, which is typically one of the cheaper ways of financing invoices. Suppliers can also manage risk more effectively by gaining greater visibility of overdue payments.
For the buyer, the hub is designed to take friction out of the payment process, saving time processing invoices, as well as opening up opportunities to take advantage of more early payment discounts.
Like this item? Get our Weekly Update newsletter. Subscribe today