Examining how to turn AP departments into revenue centers and sources of strategic advantage.

Increasing Supplier Penetration Through Payment Modality Diversity

How can hospitals grow their ePayables program? The key to a successful program is listening to the needs of your suppliers, and offering a variety of electronic payment methods to meet those individual needs.

If a supplier has liquidity issues, they may be willing to accept a discount for early payment. In such a case, having access to supply chain financing and dynamic discounting opens up the possibility of increasing supplier enrollment, while generating some incremental rebate revenue—without affecting working capital. Other suppliers may be looking to seamlessly integrate their receivables into their AR system. If so, they may be willing to pay a transaction fee for embedded invoice data in ACH payments.

For a successful ePayables program, I recommend being able to offer suppliers:

  • ACH: with embedded CTX or EDI remittance information
  • Early payment: supply chain financing and dynamic discounting
  • Purchase-Cards: allowing staff limited purchasing power without having to submit check requests
  • Ghost-Card: for suppliers whose receivables protocol requires that they store card information
  • Virtual-Card: single-use cards that offer the highest level of internal controls and guard against most processing errors
  • Push-Card: buyer initiated cards that push funds into the suppliers account through the credit card network
  • Outsourced checks: allowing all checks to be processed via an automatically generated invoice file
  • A payment services provider: to mange all payments and accommodate the diverse receivables protocols of suppliers.

By forcing suppliers to accept only one or two payment methods, hospitals are limiting themselves to stagnant, underperforming ePayables programs that barely put a dent into their reliance on paper checks. By giving suppliers payment options to choose from, hospitals can dramatically increase the success of their ePayables program.