Creating Space for Digital Payments
April 1, 2022
Retailers carrying physical goods must be sure their inventories are fully stocked at all times, regardless of whether they operate brick-and-mortar stores or eCommerce platforms. They also must be able to rely on their distributors or shipping partners to move goods swiftly, and this necessitates a convenient, effortless and — above all — speedy payment process.
Many distributors still rely on paper checks and manual payment processes, however, which could create lasting frictions that slow down or complicate the supply chain. This reliance has diminished somewhat since the pandemic’s onset, especially as more firms make the jump to remote offices, Mike Dolski, CFO for supply chain management provider BlueGrace Logistics, told PYMNTS in a recent interview.
“With the increase in remote work, we have … seen an increased shift toward electronic payments over traditional paper checks, since they can be more easily transacted remotely by AP staff,” he explained.
Integrating digital payment methods is crucial for businesses, their distributors and other entities to keep supply chains operating smoothly. These solutions must work in tandem with the manual and paper methods that remain in wide use, however, requiring firms to support a balance between emerging and traditional payment processes.
Supporting the emerging-and-traditional payment balance
Remote work during the pandemic has forced companies to reconsider the way they make and receive routine payments throughout the supply chain, but checks have not disappeared entirely from AP and AR processes. Paying via check still has benefits for companies, Dolski noted, even as shippers’ and distributors’ needs for swifter and more seamless payments increase.
“There is still a substantial volume of paper checks in the supply chain industry,” he said. “Shippers use checks to manage working capital by using the ‘float,’ or the time between when a check is produced and [when it is] actually deposited into our bank account. I don’t see that ever completely going away, especially with smaller shippers.”
Finding ways to support check payments for those businesses expecting them while also creating space for digital payment solutions is essential to remaining competitive in the new normal, Dolski said.
“Since the original lockdown through today, we have had to be nimble and hyper-responsive to address issues as quickly as possible in order to stay in front of the various problems that the pandemic has created,” he said.
Today’s shippers and distributors must keep pace with how businesses’ payment needs are changing — and the technologies vital to meeting those shifting expectations. This will require an examination of their internal systems to ensure they can offer their clients the swift, more-connected payment experiences they are now seeking.
Automation and next-gen supply chain payments
Offering the emerging payment experiences that companies are expecting from their distributors today means that shipping firms will need to adjust their own operations accordingly, Dolski said. Creating space for new technologies, such as automation, is now a prerequisite to thrive in this new environment.
“The logistics industry as a whole lags in platform automation and integration,” he said. “Many supply chain management functions are still manually done by people, and that will continue to evolve through [artificial intelligence], machine learning and chatbot [or] robot platforms.”
Emerging technologies will play a critical role in the supply chains of the future. Developing ways for payments to run smoothly on both digital and manual channels will grant both distributors and their clients key advantages as supply chain payment needs evolve.