With supplier management frequently coming under public scrutiny, new research from Barclaycard Commercial Payments, the leading provider of B2B payment solutions in the UK, 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 per cent) of procurement leaders saying their supplier relationships are now more mutually beneficial than they used to be, and a similar proportion (76 per cent) 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 per cent) procurement leaders say they are now looking for longer-term supplier relationships than five years ago, with six in ten (59 per cent) saying that their supplier contracts last at least two years.
It’s clear that communication is also king, as almost half (48 per cent) 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 per cent).
Increased focus on late payments
The research found that six in ten (61 per cent) 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 per cent 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 per cent of the time, on average. When asked why they might not meet the agreed payment terms, three in ten (30 per cent) cited slow internal processes as one of the main reasons. The same proportion (30 per cent) 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 new service that will 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 DSO (Days Sales Outstanding) 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, Precisionpay Hub will 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.
With the launch of Precisionpay Hub, Barclaycard will become the first UK issuer to provide a platform that helps buyers and suppliers manage invoice settlement.
Marc Pettican, CEO of Barclaycard Commercial Payments, said: “It’s encouraging to see that UK businesses are looking to develop longer-term and more collaborative supplier relationships, built on trust and transparency. However, in order to achieve this, it is vital that they have access to tools and systems that help them communicate with service providers effectively.
“With the launch of the Precisionpay Hub, we are proud to be the first UK issuer to provide a platform to help buyers and suppliers manage invoice settlement. By connecting businesses directly to their suppliers, we hope to simplify the procurement process, saving both parties time and money, while ensuring suppliers get paid on time more often.”
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