Suppliers reveal their payment pain points

The payments landscape is more challenging than ever for companies worldwide. Payment delays, high processing fees, and the risk of fraud can all affect small and medium-sized enterprises (SMEs) as much as large corporations.

As Taulia’s Chief Product Officer (CPO), I am keen to understand the payment challenges faced by businesses. To gain more insights into these challenges, our product team embarked on a global survey of more than 1,000 suppliers, both within and outside of the Taulia Network. Almost half of the responses were from companies with 50 or fewer employees.

Understanding payment preferences

One of our goals was to understand the factors that influence a supplier’s payment preferences. Over a third (35%) of respondents cited transfer speed as the main factor of consideration, with security and fraud prevention in second place at 30.4%. Tellingly, cost was the least important factor in determining a supplier’s preferred payment method.

We also wished to better understand the types of payments suppliers prefer to receive. While companies of different sizes had similar preferences, there was a clear regional difference: companies in EMEA and APAC favor wire transfers, while companies in North America prefer automated clearing house (ACH) payments.

Common challenges for suppliers

So which challenges are suppliers most concerned about when receiving payments from their customers? Our survey highlighted the following issues:

• Check payments: The top pain points included lost or delayed checks (33.5%) and the overhead required to process checks/manual processing (25.3%).
• Onboarding with a new customer: Over half of respondents cited registering on a supplier portal as a pain point, followed by due diligence (23.5%) and getting paid on time (23.2%).
• Cross-border payments: Here, the survey found the top challenges to be transaction costs (33.1%) and uncertainty around the final amount received (23.3%).
• Late payments: Just over 70% percent of respondents said that late payments make it difficult to operate their businesses effectively.

What suppliers want

Identifying the problems suppliers face in getting paid is the first step – so what’s the solution? To find out, the survey also asked suppliers about the types of payments that could help make their lives easier. We found that suppliers are looking for payments that offer three key attributes:

• Reliability – meaning that payments arrive when expected.
• Instant or near-instant transfer speed.
• Straight through processing to the supplier’s bank account.

We believe that there is one payment solution with the promise to tick all these boxes: virtual cards. In a nutshell, virtual cards are a form of digital payment that can be used in the same way as a physical card, with a 16-digit number. They offer fast, reliable transmission times, reduce the need for manual processing and reconciliation, and make it easier for suppliers to onboard new customers.

Beyond these features, virtual cards can bolster payment security. For example, companies can cap transaction values to an amount listed on an invoice and issue them digitally using an encrypted transport layer protocol. Fraud risk is also addressed by the use of randomly generated, unique card numbers for each transaction.

Of course, not all virtual card offerings are the same. Compared to other products available, Taulia Virtual Cards is the only virtual card solution to integrate comprehensively with Oracle and SAP ERP systems, and has an expanding roadmap for embedded functionality in SAP Ariba the Business Network. Our payment solution has an important role to play in transforming the market and opening up new opportunities for suppliers to better manage their cash flow.

To find out more, read our latest report here.