Optimising digital payments

The benefits of a strategic approach.

It’s important for charities to consider using digital banking and card solutions to help overcome payment inefficiencies.

Roland Pearce

Head of Charities, Barclays Corporate Banking

Understanding the opportunity

20%

of supplier costs are typically made up of low-value, one-off transactions too often settled inefficiently via invoice.¹

50,000

small and medium-sized businesses close each year due to late payments.²

£6.7 billion

in savings are being missed out on by UK CFOs by not taking advantage of early payment discounts.³

How best to utilise digital banking and payment card solutions to help drive efficiencies and other operational benefits is a conversation we are having with many Barclays charity sector clients.

If you've just got a one-size-fits-all approach to making payments, you're basically leaving money on the table – clunky and complex supplier payment processes are costing charities time and money.

Thomas Stratton

Barclaycard Payments

Give and take

Charities are increasingly offering digital options for taking payments, such as contactless card machines for donations and in their retail outlets, but the potential benefits of a more strategic digital approach to making payments to suppliers is often overlooked.

It’s not unusual for charities to have a confusing range of different supplier payment processes or an inappropriate one-size-fits-all approach for its supply chain partners, typically based on traditional procure-to-pay (P2P) arrangements.

The result is that charities of all sizes can be wasting both time and money because back-office inefficiencies in payments to suppliers are a major drain on resources.

Potential benefits

Payment inefficiencies mean charity finance teams can typically spend around 80% of their time on mundane invoicing admin and just 20% on value-adding activity. Rethinking payments processes using digital banking and card solutions can turn that equation on its head.

Besides helping to diversify payment methods so that they are optimised to meet the unique needs of both a charity and its suppliers, other benefits can include automated reconciliation, taking advantage of suppliers’ early payment discounts, eliminating errors and speeding up admin to a fraction of the time normally taken to process payments.

Just as importantly, new payment processes can strengthen relationships with suppliers and help to future-proof a charity’s operations by safeguarding mission-critical services delivered by your supply chain.

Thomas Stratton, Barclaycard Payments, suggests speaking to your bank. Barclays has a range of solutions that can help support your charity.

A clearer picture of your supplier spend

For any charity hoping to reap these potential benefits, the key is to get a clear picture of how much and how often you are spending with different types of suppliers. Most charities will typically make three main types of supplier payment.

Managed payments

A small number of managed payments to suppliers providing relatively high-value services, such as IT, so there may be opportunities to negotiate more favourable payment terms in order to keep cash in your bank for as long as possible.

High-volume payments

Regular, low value, high-volume payments for items like office stationery, which generate multiple invoices. Bundling invoices can improve efficiency, but straight through processing via corporate card payments can prove a more effective solution.

Ad hoc payments

Low-value, ad hoc payments – such as paying for a coffee. Once again, a purchase card solution, with suitable credit limits and controls such as single transaction limits and merchant category blocking, should be much more efficient.

Driving payment efficiencies

Reviewing your supplier spend can help to identify opportunities for payments efficiencies by providing a greater understanding of suppliers’ payment preferences and capabilities – for example, whether they are able to accept card payments.

While some charities may wish to carry out their own supplier spend review, Barclays clients can take advantage of our free Barclaycard Payment Intelligence (BPI) service, which uses data analytics to provide finance teams with a clear picture of their supply chain payments.

Using a set of algorithms created by Barclaycard Payments, our team can work with your charity to translate our supplier insights into a bespoke payments strategy and develop the right payment solutions for your suppliers to drive efficiencies, in a fraction of the time it would take to do manually.

Take time to consider how your charity could utilise digital banking and payment card solutions and discuss the benefits with your bank.