If you had a crystal ball and asked it to show you the future of procurement, there’s a good chance you’d be looking at supplier networks.

What’s that, you might ask. It describes an online system linking companies — like you — directly to your suppliers. You’ll bypass the traditional, manual means of doing business with paper purchase orders and paper invoices. As a result, there are fewer invoice discrepancies and lower processing costs, to name just two of the benefits.

Is there a driving force behind switching over? Yes. Streamlining supplier connections will save you plenty of bucks. With that in mind, it’s probably just a matter of time before the savings will cover the costs of switching over your system, at least for some businesses.

Two examples:

• The cost of processing a single payment through a network is $6.28; the old-fashioned way, $8.11.
• The average cycle time in days from receipt of an invoice until payment is scheduled is 15.5 days; doing it the old-fashioned way, 17.9 days.

The success and efficiency of supplier networks has already begun to spill over into Accounts Payable. Handling electronic payments takes far less time, leaving A/P staffers free to tackle pressing problems. 

Top performing companies, according to an AberdeenGroup report on supplier networks, utilized electronic invoicing (33%) and electronic payments (46%) more than lower-performing competitors. 

One example cited in the report: Five years ago, a North American company committed to implementing a supplier enablement program. Before taking this course, though, average processing costs for one order was around $20. Once the supplier enablement network was up and running, these costs were slashed 75%. In addition to lower processing costs, the company is reporting less invoice discrepancy.

Tags: invoice, order, processing, supplier