Efficient and timely vendor payments are essential for maintaining a healthy business relationship and ensuring a smooth supply chain.
In this comprehensive guide, we will explore the various aspects of the vendor payment process. From understanding how to manage wholesale and vendor billing to knowing how to improve the entire billing cycle, we’ll discuss the ins and outs of vendor payment management.
By the end, you will have a better grasp on how BlueCart Pay can help you to optimize your vendor payment process for increased efficiency, reduced costs, and improved relationships with your suppliers. Let’s get started.
What is Vendor Payment?
Vendor payment refers to the process of paying wholesale distributors or service providers for the goods or services they have delivered to a business. The vendor payment process ensures that vendors are paid accurately and in a timely manner.
This process involves several steps, including purchase order issuance, invoice receipt and verification, payment approval, and finally, payment remittance. If you run a wholesale business, then the process of paying your suppliers is somewhat similar.
Let’s look at what wholesale billing is.
What is Wholesale Billing?
Wholesale billing is a process that many companies use to pay their bills and invoices to multiple vendors. This is different from retail billing which involves the end customer and billing an individual customer.
Many companies choose to bill pay vendor invoices through wholesale billing and manage their vendor payments similarly to standard retail subscriptions. Wholesale billing involves end-to-end support practices for bill cycles.
To streamline this process, a business owner may prefer to use wholesale billing software. Such software uses inventory management, invoicing and payment, and accounting to keep expenses organized.
Key Takeaway: Wholesale billing software makes it easy for businesses to pay their invoices with little margin of error.
Vendor Billing: What is Vendor Billing?
Vendor billing is the accounts payable process that businesses follow to manage payments made to vendors that provide them with supplies or services. The vendor bill is also considered the invoice that suppliers issue after fulfilling purchase orders.
Keep in mind that the invoice process and purchase order are different. Look into purchase order vs invoice to understand the difference between the two. It will also be helpful to understand how a purchase order number helps the organization during these processes.
Key Takeaway: Small and large businesses need efficient processes in place to ensure smooth workflow and operations. This includes vendor billing processes that allow businesses to manage vendor payments.
Some businesses don’t monitor the vendor billing process at all, despite how important it is for cash flow and internal performance.
In fact, some issues that may arise due to a poorly managed vendor billing cycle include:
- Late payments
- Poor relationships
- Higher prices
- Supply chain disruptions
3 Steps to the Vendor Billing Process
A solid vendor billing process begins after the buyer evaluates and selects the vendors they want to work with. Look into how to find wholesale vendors and a wholesale catalog to explore your options. Once completed, you can move on to the steps of setting up your vendor billing process.
- Step 1: Set Up a New Vendor
- Step 2: Receive an Invoice
- Step 3: Pay Your Vendors
After these steps, you can record the payment in General Ledger and issue payment to the vendor.
Manage and track your multiple vendors and streamline the entire procurement process. Download our free easy-to-use Wholesale Vendor Management Spreadsheet Templates.
How to Bill Pay Vendors: 3 Ways To Digitally Pay Vendors
Three ways to digitally pay vendors include:
- ACH
- Automated Checks
- Virtual Cards or vCards
ACH Payments
An ACH payment is processed by a bank or credit union through the Automated Clearing House. These are direct payments that are used to pay vendors directly from business checking accounts.
If you’re a client using BlueCart payment processing, you may be interested in using BlueCart Pay. This will allow you to pay via ACH and have BlueCart handle the rest.
Key Takeaway: ACH vendor payments are a secure, fast, and convenient way to pay your vendors. It allows you to make on-time and quick payments to your vendors.
Automated Checks
There are a couple of ways to use checks to pay your vendors.
The first way is to get out your checkbook, handwrite each check, put it in an envelope, seal it, add a stamp, and mail it out to your vendor. It’s important to do this with enough time before the vendor’s due date to avoid late payments.
Second way to use a check to pay your vendors is using automated check processing. This method provides you with the benefits of sending a check, without all the hassle.
It’s possible to automate your accounts payable using different wholesale billing software. This software will typically automate check processing, so you can pay your vendors.
Virtual Cards or vCards
Some businesses seek to combine the benefits of physical purchasing cards, a check, and the efficiency of an ACH payment. It’s possible to do this with virtual cards, also known as vCards.
This may reduce the risk of fraud, including credit card fraud, improve cash flow, and allow you to quickly pay your vendors. vCards provide a controlled invoice process that allows you to control who is getting paid and how much money is spent.
An important aspect that virtual cards provide is the shift from accounts payable from a source of overhead expenses to revenue generation. Virtual cards deliver rebates and these are tangible expressions of this revenue generation, especially in the restaurant industry.
How To Pay a Vendor via ACH
When using ACH payments to pay vendors, there are a few things to keep in mind.
- You can only pay vendors that have a US bank account.
- It’s not possible to complete an ACH payment if you don’t have sufficient funds in your bank account.
- Some banks and credit unions have daily and monthly limits on ACH transfers.
- Be mindful of payment processing time.
3 Benefits of ACH payments
Many businesses use ACH payments to pay their vendors, regardless of the industry they’re in. ACH payments provide win-win scenarios for vendors and business owners.
Three benefits of ACH payments include:
- Low transaction fees.
- Quick payments.
- Increased security.
3 Wholesale Billing Software Options
When it comes to wholesale billing software platforms, there are a few different choices to pick from. Keep in mind that it’s ideal to evaluate your needs as a wholesale distributor and choose the software that fits best.
Here are three wholesale billing software options:
1. BlueCart Pay
BlueCart Pay is the latest tool that BlueCart has to offer. It allows businesses to streamline their invoice process, payment, and supplier relationship management needs.
With BlueCart Pay, clients have the ability to pay existing and third-party vendors for goods and services through ACH payments. BlueCart has evolved to provide clients with the opportunity to make cost-effective bill payments.
For example, clients used to rely on BlueCart strictly for wholesale meat or produce transactions. Now, clients can pay their vendors for rent, electricity, gas, warehousing, and other operational bills.
2. Zoho Invoice
When it comes to wholesale billing software for distributors, Zoho Invoice is a common choice for businesses to use. Zoho Suite offers tools such as customer relationship management (CRM) software and custom invoices for clients. This allows them to process payments directly.
Using Zoho allows you to use an invoice template to design your documents. With this software, you can also create customer profiles and track spending. It’s also possible to mail physical copies of invoices and digital files and send invoices in different languages and currencies.
3. FreshBooks
FreshBooks offers wholesale distributors many features and invoicing tools. This way, they can create custom invoice documents, send reminders, and process payments through different gateways.
The platform is ideal for distributors that have clients pay a percentage of their invoice upfront and the rest once they receive their products. This minimizes risk and is another wholesale tactic similar to an MOQ and EOQ.
How to Improve the Vendor Billing and Payment Process
Now, let’s look at some steps to take to improve your vendor payment process.
- Automating the Process
The first step to improving your vendor payment process is automation. There are now several payment technologies and payment processing software that can make your life easier and create efficient business systems and processes.
When selecting a vendor payment software to automate your payment process, consider the following features:
- Invoice management automation
- Recurring payments
- Integration capabilities
- Reporting and analytics
- Security and PCI compliance
- Set Clear Payment Terms
Setting clear payment terms is essential for maintaining a transparent and efficient vendor payment process. By establishing expectations and guidelines upfront, you can avoid misunderstandings and disputes, ensuring a smoother payment experience for both your business and your vendors.
- Monitor and Audit Payments
Regular monitoring and auditing of your vendor payments can help identify inefficiencies, errors, or potential fraud. By staying on top of your payment process, you can address issues quickly and maintain a healthy cash flow.
- Build Strong Vendor Relationships
Ultimately, improving your vendor payment process relies heavily on the strength of your vendor relationships. By fostering open communication, transparency, and trust, you can create a payment process that benefits both your business and your vendors.
Using BlueCart Pay for Vendor Payment Management
BlueCart Pay simplifies and streamlines all the bills you owe in one place. This means not just your wholesale suppliers and anything in your pipeline inventory, but also your electric bill, gas bill, and phone bill, to name a few. Let’s look at the specific advantages of using BlueCart Pay.
- One-Click Preferred Method Payment
A significant advantage of using a cloud-based vendor billing and payment system is the ability to quickly and conveniently pay your providers. With BlueCart Pay, clients pay us via ACH and we send a check to pay the bill. In the early stages of a business, many accounting and management staff stick to cash, check, and bank transfers if needed.
- Eliminate Paper Checks and Associated Postage Costs for Your Business
Another advantage of our cloud-based vendor bill payment system is it eliminates your need to send paper checks. Paper checks also require postage for mailing. However, BlueCart Pay does all of this work for you while you pay us via ACH.
- Consolidate All Payments In One Dashboard
BlueCart Pay consolidates your pending payments in one easy-to-manage invoice management dashboard. Instead of continuing to pay for all of the invoice management solutions you’ve used previously, see it all in one place.
- Paperless Tracking of All Approved Invoices
BlueCart Pay’s paperless tracking of all approved invoices eliminates both of these hassles. Your vendors’ contact information, preferred payment method, pending invoices, and paid invoices are stored electronically.
BlueCart Pay Is the Way
BlueCart Pay is the simplest way to streamline all of your vendor bill payments. It will help you make on-time payments and you won’t have to deal with tiresome paper checks or fast-growing postage costs.
Our vendor payment dashboard allows you to track your payments and see how much money you are sending at any given time. Ready to save time and money in your business? Email our sales team to experience BlueCart Pay for yourself and see how it can improve your bottom line.