Opinions expressed by Entrepreneur contributors are their own.
Turning a small business into a success involves many factors, but a big part of it is how well you get along with your suppliers. Since businesses rely on vendors for essential supplies, cultivating strong ties ensures a reliable supply chain, minimizing disruptions. Managing these connections can get tricky as businesses grow, but there are ways to make it smoother and more cost-effective.
The human element is important in improving vendor relationships. Unlike large corporations, small businesses are more likely to engage in regular personal interactions with vendors through meetings, calls and visits. These personal connections often go beyond simple transactions and are more geared towards developing a symbiotic partnership with effective communication and mutual collaboration. The human touch adds empathy and reliability, transforming vendor relationships into partnerships built on trust and shared goals.
How can the personal touch in Accounts Payable (AP) (the part of business where you make sure you pay your bills) help foster positive vendor relationships for the success of your small business? Consider these three approaches to ensure a strong and beneficial partnership.
Related: 3 Secrets to Streamlining Your Accounts Payable Process
1. Personalize your communication strategies
To build strong relationships with vendors, it’s important to personalize communication. Understand each vendor’s preferences and priorities, whether they prefer emails, phone calls, or in-person meetings. When you talk with them, take notes or write down what you remember about them after the meeting. Before you talk with them next, re-read your notes and ensure you don’t ask the same question twice. A good Customer Relationship Manager (CRM) tool can help you keep track of how your clients want to be spoken to.
Successful personalized communication includes regular updates, timely responses, and expressing appreciation. Seeking feedback and addressing concerns promptly is important. Simple gestures like personalized thank-you notes, recognizing partnership milestones, or expressing appreciation for timely payments contribute to a positive and collaborative atmosphere in the vendor relationship.
Related: 80% of Businesses Fail Due To a Lack of Cash. Here are 4 Reasons Why Cash Flow Forecasting Is So Important
2. Be transparent in financial transactions
Transparent financial dealings with vendors hold significant importance for several reasons. If you share financial information openly, it helps everyone trust each other and work together smoothly. Openly sharing financial information prevents misunderstandings and sets the stage for fair negotiations, potentially resulting in better terms for both parties.
In terms of invoicing, clarity on payment terms is key. By discussing and agreeing upon invoices with clients before sending them out, you can ensure everyone is on the same page. No one likes costly, hidden surprises. Being clear ahead of time prevents misunderstandings and shows your commitment to fair and transparent business practices.
When creating invoices, use straightforward language and specify payment due dates. This expedites the payment process and establishes clear expectations, contributing to your business’s streamlined and efficient financial workflow. By prioritizing transparency, you build stronger relationships with vendors and improve the overall efficiency of your financial transactions.
Related: 4 Cash Flow Trends To Know About in 2024
3. Streamline processes for efficiency
Small businesses can make things run smoother by simplifying their payment processes. One way is by using software to handle tasks like paying invoices and keeping records automatically. This helps avoid mistakes and speeds up payments. Delayed payments are a common challenge, affecting 93% of companies. Another helpful strategy is setting up a standardized payment approval workflow for invoices, which are reviewed and approved quickly. This ensures that payments happen on time and keeps financial operations running smoothly.
Also, adopting digital payments makes transactions faster and more accurate, making it easier for vendors. The total transaction value in the Digital Payments market is set to hit a whopping US $11.55 trillion in 2024! Connecting modern payment solutions with accounting systems is another smart move. This ensures that data is reconciled automatically, reducing the chance of errors and improving overall financial management. And with this, small businesses can save hours a week. Small businesses can make their financial processes more reliable and effective by making these changes.
The impact of streamlined procedures on vendor satisfaction and business success is substantial. Efficient processes mean vendors receive timely payments, fostering trust and reliability. This, in turn, improves the overall vendor experience, leading to stronger relationships.
Related: Slow Payment Options Are Costing Your Business — Here’s the Alternatives of the Future
The success of small businesses hinges on strong vendor relationships built through personalized communication, transparent financial dealings, and streamlined accounts payable processes. Paying bills is not merely a financial transaction but a testament to the trust and reliability underpinning vendor relationships. Businesses uphold integrity and accountability by prioritizing transparent financial transactions, laying the groundwork for enduring partnerships.
While technology helps us work more efficiently, the human touch – the personal connections we make – solidifies these relationships. Small businesses should prioritize open communication, mutually beneficial collaboration, and a personal touch to ensure enduring vendor connections, creating a powerful synergy for sustained growth and prosperity.