Retail companies have always succeeded or failed based on how well they serve their customers. When service is consistently great, it’s that much more likely that customers will become loyal to a specific retailer.
That’s a big deal because — while they might account for only 15% of a retailer’s customer base — loyal customers can drive as much as 70% of all revenue. Create more loyal customers and the results will follow.
On the flip side, when the customer experience is inconsistent or hits a speed bump, customers are quick to find a substitute. After all, the customer experience is a key differentiator today, and competitors are always a quick search away.
In today’s fast-paced, on-demand world, customers expect orders to be in stock and shipped quickly. If they go to a website and products aren’t available — or they’re told they need to wait weeks to get something — that’s a customer service breakdown that could lead them to search elsewhere.
When retailers are suffering from supply chain and operational problems, they’re incapable of delivering exemplary customer service in each interaction. For this reason, retailers need to focus on strong supplier relationships to keep customers happy and satisfied. By doing so, they can mitigate supply disruptions while offsetting rising inflation and increased labor costs while ensuring their products are available to customers where and when they need them.
One way retailers can minimize supply issues and strengthen supplier relationships is by automating accounts payable. AP provides a key interface with suppliers and is the lynchpin to getting those suppliers paid on time. Slow, tedious AP interactions will lead to difficulties with suppliers.
With an AP automation solution in place, retailers can achieve streamlined and automated straight-through processing of invoices, give suppliers visibility into their payments, and avoid credit holds — all of which enable them to focus more on improving the customer experience.
Achieving Straight-Through Processing
Retailers typically approve supplier invoices using a three-way matching process where they compare the invoice, purchase order, and goods receipt to make sure they pay only for what was ordered and received. When they receive a shipment, they make sure the invoice matches what the purchase order indicates and that the receipt reflects what was actually delivered.
The challenge is that many suppliers in the retail industry are notorious for not correctly including all the necessary information needed to process and pay an invoice. At the same time, it’s not uncommon for suppliers to ship different products at different times — even though they’re on the same invoice — which presents a challenge for three-way matching.
When retailers manage this process manually, it takes a lot of resources and requires collaboration with a number of internal stakeholders, including employees in receiving, procurement, and AP.
By automating the AP process, best-in-class retailers achieve straight-through processing for more than 95% of invoices. This means they are received, verified, and matched without manual intervention 95% of the time, a sharp contrast to the retailers that rely on a tedious, slower manual process.
As a result of automation, the AP function — along with other internal stakeholders — can reclaim a considerable amount of time, giving the organization more resources to devote to enhancing customer service.
Giving Suppliers Transparency Into Payments
Businesses that use leading AP automation solutions form direct digital connections with their suppliers. They grant suppliers easy visibility into the status of payments, which promotes financial stability and prevents them from calling and emailing the AP team to ask about when they are scheduled to be paid, further tying up company resources.
Additionally, AP automation tools give retail organizations visibility into invoice payment options.
With a glance at an invoice dashboard, or with automated rule-driven technology, AP teams can decide which invoices to pay early and receive a discount or hold cash until the invoice is due to extend cash flow.
This helps maximize their cash position, which prevents the need to trim resources elsewhere in the organization to pay bills.
Avoiding Credit Holds
When an invoice enters a manual three-way matching process, payments slow down.
For example, imagine a retailer buys 10,000 shirts from a garment manufacturer with the intent to sell them out of their e-commerce store. For argument’s sake, let’s imagine that the purchase order is for 10,000 shirts and the invoice is for 10,000 shirts, but the retailer only receives 5,000 shirts.
They don’t want to pay for the full order because they’ve only received half of it. So now, they must decide: Do they wait for the rest of the shipment to come in before paying the bill? Or do they pay half now and half later?
Such decisions take time — and, depending on how many issues like this materialize — potentially a lot of it. If suppliers must wait a substantial amount of time to get paid, they may eventually decide to not ship products to you and put you on a credit hold.
Ultimately, this becomes a customer service problem because you won’t be able to fulfill orders and send your customers what they’re looking for.
By automating the AP process, you can avoid these types of delays. Suppliers get paid on time, enjoy visibility into what’s happening with their payments, and rate you as easy to work with. In turn, they are more likely to prioritize your orders should they run into operational challenges or supply issues of their own.
Strengthening Customer Service with AP Automation
When most retailers think about improving customer service, odds are they don’t think about how investments in AP automation can make that happen. But in many ways, AP automation is the low-hanging fruit retailers should grab first.
By optimizing the AP function and enabling suppliers to get more visibility into their payments, retailers can fortify supplier relationships, making it that much easier to keep products in stock, fulfill orders rapidly, and otherwise delight their customers in each interaction.
That’s the ticket to a more satisfied, more loyal customer base — one that’s ready to help retailers weather the current economic storm and end up in a stronger position on the other side of it.