Why supplier adoption of your accounts payable automation and vendor management software is critical to your ROI

In the rapidly evolving world of e-procurement, effective supplier collaboration is essential for maximising return on investment (ROI). Despite significant advancements in technology, many businesses struggle with low supplier adoption rates on closed networks like SAP Business Network, Oracle Cloud and others, leading to increased operational costs and unfulfilled business case benefits.

This blog post explores the evolution of business networks, the limitations of closed supplier networks, and why modern, flexible solutions like SpendConsole’s multi-channel supplier portal are the future of accounts payable (AP) automation.

Supplier networks have transformed from simple buyer-supplier relationships to complex ecosystems involving multiple stakeholders. Initially managed through manual processes, these networks have become more sophisticated with digital technologies.

Platforms like SAP Business Network have been at the forefront, offering integrated solutions for procurement, supply chain management, and financial transactions. However, the adoption of these networks by suppliers remains a significant challenge.

“This area is clearly challenging and will be very active, with 80% to 85% of all companies surveyed planning to enhance their supplier relationship management (SRM) capabilities in an area likely poised to be as foundational as strategic sourcing.”

– Deloitte’s 2023 Global Chief Procurement Officer (CPO) Survey

Also, according to Ardent Partners, senior leaders now recognise the significant value AP departments bring to overall business performance, with two-thirds of executives rating their activities as very or exceptionally valuable, up from just 33% in 2017​​. However, they also highlight that the performance ceiling for AP automation is due to reliance on outdated tools and approaches.

Image Source: Ardent Partners

1. Complex Change Management and High Costs

Closed networks often require suppliers to undergo a rigorous onboarding process, which includes understanding new terms, fees, and compliance requirements. This can be overwhelming, especially for smaller suppliers with limited resources.

Moreover, the costs associated with these networks can be prohibitive, discouraging many suppliers from participating

2. Low Adoption Rates

Adoption rates for closed supplier networks are reported to be in the low 20% range on average. This low adoption means that a significant portion of suppliers continue to rely on manual processes, which increases operational costs and undermines the efficiency gains promised by these platforms.

3. Diverse Supplier Needs

No single network can cater to the diverse needs of both domestic and international suppliers, each operating within unique regulatory and tax environments. Closed networks struggle to accommodate these variations, leading to inefficiencies and increased risks of non-compliance.

4. Supplier and Buyer Freedom

Closed networks tie both suppliers and buyers to specific platforms, limiting their freedom to choose the most suitable system for their needs. This lack of flexibility can hinder operational efficiency and collaboration.

The OpenPEPPOL framework highlights the importance of open, interoperable networks that provide freedom of choice, ensuring smoother and more efficient business interactions.

Image Source: Deloitte Insights

5. Broader Supplier Needs Beyond Procurement

Many closed supplier networks primarily address procurement suppliers, but businesses need to look beyond this. Non-procurement suppliers, such as those providing utilities, rent, and asset-related services, also play a crucial role in business operations.

Closed networks often fail to meet the needs of these suppliers, necessitating a more inclusive approach.

6. High Cost of In-House Supplier Onboarding Resources

Investing in in-house resources to convince suppliers to join a specific network often proves futile. Despite significant investments in time and resources, supplier adoption rates remain low, diverting valuable resources away from core business activities.

“Getting insights into the structure and profile of your tier 1 supplier network is difficult… When it comes to supply chain resilience, the lack of visibility into their supply chain is a hidden weakness for most companies.”

– Risk Management Insights from the PwC Pulse Survey

Low supplier adoption and reliance on manual processes also expose businesses to increased cyber and financial fraud risks. Manual processes are more susceptible to errors and fraud, as they lack the automated checks and balances of digital systems.

By not fully integrating suppliers into a secure, automated network, businesses leave themselves vulnerable to fraud, which can have significant financial and reputational impacts.

Given these challenges, a one-size-fits-all approach is not viable for managing supplier relationships. Modern AP automation platforms must offer multiple channels tailored to the needs of different supplier groups.

This is where SpendConsole’s multi-channel supplier portal stands out.

While the OpenPEPPOL network is gaining momentum, with more countries joining the e-invoicing mandate, widespread adoption will take several years. For instance, in Australia, where the Australian Taxation Office has been driving adoption since 2019, only 129,000 businesses were registered for e-invoicing as of April 2024, representing only 74,000 monthly invoices.

This adoption is mainly by federal government businesses, with large-scale adoption by enterprise customers and their suppliers yet to be proven. This underscores the necessity of a multi-channel approach to ensure all third parties and suppliers are effectively engaged and integrated.

1. Multiple Channels for Diverse Needs

SpendConsole’s portal provides various communication options, unified controls and experience across email, online portal, EDI and PEPPOL. This flexibility ensures that suppliers can choose the most convenient and efficient method for their operations, leading to higher adoption rates and smoother transactions.

2. Simplified Onboarding and Automated Verification

SpendConsole simplifies the onboarding and verification process with intuitive, user-friendly interface for suppliers and comprehensive support. Key data from relevant regulatory authorities i.e. the Australian Taxation Office and Australian Securities Exchange, and also multiple bureaus automate necessary compliance steps. This reduces burden on both suppliers and their buyers, and ensures a faster, secure, and more efficient transition to the automated system.

3. Intelligent Multi-Language and Multi-Currency Invoice Recognition

Our platform supports intelligent invoice recognition that can handle complex invoices in a myriad of formats and multiple languages and currencies, ensuring compliance and accuracy across different regions.

4. AI Copilot for Accurate Matching

SpendConsole features an AI copilot that matches each invoice line item correctly to purchase orders and receipt line items, including accurate general ledger coding, reducing errors and ensuring compliance. The AI automatically classifies the invoice spend against taxonomy for accurate spend analysis.

“Integrating AI and machine learning in AP processes can substantially enhance efficiency, accuracy, and fraud detection, paving the way for smarter AP operations​.”

– Gartner

5. Truly Open Platform

Adhering to open technology principles, SpendConsole connects to a broad range of supplier systems and third-party systems, ensuring seamless integration and collaboration.

6. Scalability and Compliance

Our solution is designed to accommodate the unique requirements of both domestic and international suppliers, ensuring compliance with local tax and regulatory standards and reducing the risk of errors and penalties.

7. Cost-effective and Efficient

By leveraging a multi-channel approach, businesses can achieve significant cost savings and improve operational efficiency, eliminating the need for extensive in-house resources dedicated to supplier onboarding.

1. How can your business reduce the risks of cyber and financial fraud associated with manual processes?

2. Is your current AP and vendor management software flexible enough to manage compliance, and accommodate the diverse needs of your international and domestic suppliers?

3. What steps are you taking to ensure that your AP department is leveraging the latest digital tools and technologies?

The evolution of supplier networks in procurement highlights the need for flexible, modern solutions that cater to the diverse needs of suppliers. SpendConsole’s multi-channel supplier portal offers a comprehensive, scalable, and cost-effective solution for AP automation.

Ready to see the difference that SpendConsole can make on your Finance and Accounts Payable processes? Schedule a free demo to learn more about our multi-channel supplier portal and get a sneak peek of the future of AP automation. For more in-depth insights into the evolution of business networks and how SpendConsole can transform your AP processes, you can also read through the rest of our articles in our News Room.