Building bridges beyond transactions in 2024: Forming better relationships between suppliers and buyers

This year organisations must establish stronger links with their suppliers. Whilst a severe recession seems to be less of a risk, major banks still expect global economic growth to slow down. This impending downturn demands a more collaborative relationship between suppliers and their customers.

Traditionally, customers held most of the power by directing the flow of business. But that has now changed. Geopolitical unrest and the pandemic have had a significant impact on supply chain security, drastically changing the supplier-buyer relationship. This disorder resulted in high demand and low stock, putting suppliers in charge. As a result, suppliers have tightened credit policies and payment terms, resulting in less flexibility for businesses.

With the economy becoming more volatile, the imperative for suppliers and buyers is clear: construct a bridge sturdy enough to survive uncertainty. Suppliers whose terms are seen to become too inflexible will find themselves losing customers. On the other hand, buyers will have less choice in suppliers if they fail to become more collaborative. Cash flow optimisation is also a shared priority, so both must safeguard their financial wellbeing. To achieve a more collaborative relationship, all parties need to establish a new dynamic. 

To build a bridge between buyers and suppliers, easy collaboration is key. Finance teams on both sides are integral for deals to go through and payments to be made. But without digitised processes this can be painful. The manual toil involved in invoice data input often creates errors, which frustrate both suppliers and buyers. Organisations need to automate and digitalise their finance function to enable greater visibility, accuracy, and faster processing of invoices. Accounts Payable (AP) teams, for example, will no longer spend valuable time repeatedly asking for invoice corrections, as automation will make sure everything is accurate. Instead, staff can spend their time on more value-adding activities.

Automating the finance function also gives teams better insights into payment behaviours. These insights can be used to further improve and deepen supplier-buyer relationships. For example, suppliers can identify customers who always pay early and reward this with better payment terms or discounts. But without automation this level of knowledge and understanding will be impossible to obtain.

Once finance teams have the necessary tools to build the foundations of the bridge, they can then focus on developing relationships with their counterparts. The benefits of these relationships go far beyond just optimising the invoice process but can have a profound impact on business growth. Enterprises often forget that finance teams are an important aspect of customer experience and that supplier management skills are essential to business success.

Improved collaboration between suppliers and buyers can enhance the overall business experience. A trustworthy and balanced partnership is more likely to be successful in the long-term. Suppliers are inclined to favour customers that prioritise on-time payments, while customers will gravitate towards suppliers that can resolve disputes seamlessly. In the current economic circumstances, the ability to cultivate relationships that are built on trust and create repeat business is invaluable.  That is because business leaders will have more confidence to know when money will be coming in and out and have the backing of intelligent automation to provide accurate insights. The Money Matters report underscores the significance of this stability, as almost three quarters of small businesses admitted cash flow issues in the last 12 months.  

This year, the difference between sinking or swimming lies in the strength of the bridges constructed between customers and their suppliers. Better communication, collaboration and cohesion will form the bedrock for long partnerships. This relationship is not merely a connection – it will act as a lifeline. It will enable organisations to take better control of their financial wellbeing, reduce the exposure to risk and enable better profit margins. As the tides of economic uncertainty ebb and flow, it is those companies with improved collaboration that will succeed.