There has never been a more exciting time to be a part of procurement and payments. The evolution of the space, driven primarily by advanced technologies, is giving companies greater financial visibility across their organizations and outward to their supply chains. With this insight comes the ability to better manage spend, working capital and supplier relationships, opening up a new world for business growth.

Eric Wilson

Here are some of the business trends that are driving this innovation:

Procurement is more intuitive and collaborative

It takes a village—or in this case, an entire company—to achieve smarter spending, and organizations are using new tools and techniques to engage all of their employees in this goal. Similar to their consumer counterparts, organizations are focusing on delivering the customer experience to employees purchasing goods and services by offering intuitive catalogs, mobile capabilities and efficient and seamless processes. By making it easy to purchase from an electronic catalog in the natural course of their work, organizations are encouraging employees to make the best possible buying decisions for their organizations.

Crowdsourcing is another area that has morphed from the consumer realm into B2B purchasing. Employees are being encouraged and empowered to share information within the purchasing system, such as supplier reviews and green-friendly practices, and to work with their colleagues to achieve company spend goals. This user-driven process is not only enabling smarter, accountable e-procurement, but it is also delivering significant cost savings.

Buying, paying and selling have become interconnected

The silos that separated procurement, invoice automation and payment are giving way and becoming a thing of the past as companies recognize the benefits that a networked purchase-to-pay process delivers. For example, the information that an accounts-payable team collects—such as what a company is spending, and with whom, and what its outstanding liabilities are—is valuable to other departments.

With this insight, procurement professionals can consolidate spend with certain suppliers, negotiate volume discounts and take advantage of buying opportunities. Finance departments can more quickly and accurately close contracts, and Treasury teams can manage cash flow and working capital with confidence. This information not only gives the organization an accurate snapshot of its financial situation at any given point in time, but it also provides visibility into the process bottlenecks that impede a successful networked purchase-to-pay approach.

Similarly, the rise of B2B commerce networks is changing the way companies are buying and selling. Through these collaborative platforms, trading partners around the world can send and receive purchase orders, create invoices and credit notes, and exchange e-catalogs. Suppliers can check on the status of invoices in real time, reducing inquiries to an accounts-payable department.

Transacting over B2B networks can streamline processes, expedite payments, reduce operating costs and improve relations between buyers and suppliers. In addition, suppliers have the opportunity to improve their brand recognition and business opportunities with access to a global network of potential customers.

Multiple financing options are improving cash flow and working capital

B2B networks also are facilitating the rise of new payment and financing options, which are changing the payment paradigm. Traditionally, the payment relationship was weighted in the buyers’ favor, often creating cash flow issues for suppliers, who were held hostage by extended payment terms or late payments.

Now, buyers and sellers on internet-based networks can choose from multiple payment and financing options available from network trading partners that suit their needs both for accounts-payable and accounts-receivable financing. For example, suppliers might choose to be paid early by offering attractive payment terms, while buyers may choose to extend their payments by leveraging various working capital optimization strategies, all in a real-time dynamic connected marketplace. These options enable suppliers to get paid faster with greater certainty, decreasing their Days Sales Outstanding, while allowing buyers to extend their Days Payables Outstanding and hold onto cash longer—providing a win-win scenario for cash flow and working capital for both parties.

Innovations in procurement and payment technology are creating a paradigm shift in not only how organizations view and manage key finance operations, but also in how they conduct commerce with trading partners. As the silos between internal departments and buyers and suppliers continue to give way to increased data sharing and collaboration, the possibilities for strategic commerce become even greater.

Eric Wilson is vice president of purchase-to-pay for Basware, a provider of networked purchase-to-pay solutions, e-invoicing and financing services. He can be reached at [email protected].