When it comes to receiving invoices from suppliers—regardless of whether a hotelier runs a small bed and breakfast or a large, multinational hotel chain—suppliers are concerned about one thing and one thing only–getting paid as quickly as possible. Although that should come as no surprise, the conundrum that most suppliers–and by extension, most hoteliers–face is the desire to get paid faster while still using old methods to submit those payments.
A 2017 study by Receivable Savvy found that 90 percent of respondents identified faster payments as the most important aspect of invoices. But suppliers may not implement a hotel’s preferred invoicing methods because they have multiple customers with varying needs. While some hoteliers want e-invoice submissions, others want submission by portal, email, regular paper, or other forms. Some suppliers don’t want to change their methods, and others are concerned about spending too much on a supposed “streamlined” system that inevitably has them doing just a much work now compared to before they implemented the system.
Those suppliers who are interested in getting faster payments often don’t implement processes that allow them to take receipt of that payment more quickly from hoteliers. Although most suppliers (87 percent) still receive paper checks in one form or another, only 25 percent want to receive payment this way. Most suppliers prefer Automated Clearing House (ACH) but they are concerned for multiple reasons: not knowing how much they will have to devote to set up ACH payment acceptance with their banks and customers, even though the actual payment fees are minimal (less than wire transfers and credit card fees); the cost of implementing ACH with the company; the process of convincing customers to pay via ACH when some customers may be resistant to change; and the challenge of properly applying remittance data to their accounts.
The small percentage of suppliers who still prefer old-fashioned paper checks still like it for a variety of reasons: they find them easier to track and keep records around; they supply the most information in regards to remittance data; there are no fees to receiving checks unlike ACH, wire transfer, and credit cards. For these reasons, the U.S. continues to lag behind Europe in terms of electronic payments.
Because paper and email invoice submissions are typically slower, there may be opportunities for suppliers to be paid faster on the back end, especially now that early invoice payment solutions are available. However, not all suppliers are open to accepting early invoice payments—just 48 percent, in fact. Hotel customers and third-party early payment providers primarily target suppliers who are using electronic invoicing, not those submitting invoices via paper and email. Suppliers who submit invoices electronically are less inclined to use early payment compared to those who submit invoices by paper and email.
The reason for this may be that suppliers have optimized invoice submissions on the front end with third-party e-invoicing, and they may not feel the need to optimize on the back end with early payment solutions. Conversely, those submitting invoices via paper and email may appear more open to accepting early invoice payments, but the payers are not targeting them. That’s partly because the invoice/receivable needs to be verifiable, which is more difficult to do with paper and email than with electronic invoicing.
For hoteliers, this is important to know, as your suppliers – those providing everything from beds, sheets, silverware, lamps, cleaning solutions, etc., want to be paid as quickly as possible, but there will be challenges when trying to get them to take electronic payment as well as when trying to entice them to accept early invoice payments.
Suppliers provide everything from beds, sheets, silverware, lamps, and cleaning solutions, and they want to be paid as quickly as possible. Hoteliers should know and expect to face challenges in their efforts to convince suppliers to accept electronic payment and early invoice payments.
About the Author
Ernie Martin is the founder and managing director of Receivable Savvy.