The Role of Vendor Enrollment in B2B ePayments Adoption

I attend many payments industry conferences and meet with many payments professionals, and I continually hear the same theme around vendor enrollment, also referred to as vendor enablement or vendor adoption.  It is the single biggest hurdle for companies seeking to migrate from checks to electronic payments such as ACH or virtual card. Because most companies transact business with thousands of vendors, time and staff constraints often limit the rate at which vendors are invited to receive electronic payments.  Historically, these initiatives were driven by a desire to reduce check payment costs.  Increasingly, these initiatives are now driven by a desire to increase card spend in order to receive rebates generated by virtual card programs.

For this reason, A/P departments are increasingly outsourcing payments execution to third-party service providers who not only execute on check, ACH, wire or card payments, but also manage vendor enrollment to help sign vendors up to receive electronic payments.  These third-party service providers will manage an end-to-end enrollment campaign which involves reaching out to vendors, explaining the benefits, answering questions and assisting with enrollment. 

Outreach to vendors nearly always includes a combination of emails, letters and phone calls.  The most successful campaigns develop messaging that addresses frequently asked questions and describe how accepting electronic payments will benefit the vendor. 

These benefits might include earlier payment, more frequent payment, reduced risk of lost or stolen checks, prompt settlement, receipt of electronic remittance, or status as a preferred vendor enjoying a greater concentration of spend.  Messaging can be further tailored with wording or presentation geared toward specific vendor segments.  This might include mandates for vendors of commodity items, or a mention of typical industry practices. 

The tone of a campaign will vary by payer.  Some payers are comfortable issuing a mandate, some have a specific dollar amount or percent enrollment goal that that they wish to achieve, and some adopt a light touch approach in order to maintain carefully nurtured relationships with their vendors.  Most payers will review the sample messaging provided to them and customize it to their satisfaction as needed.  A key component of the enrollment campaign is the analysis of the vendor master file and A/P spend.  The goal of the analysis is to identify and prioritize the vendors to be targeted during the campaign.  This analysis yields critical information that can answer questions including:

• What type of product or service is being purchased?
• Is the product or service unique or a commodity?
• Is the vendor one of many or the sole vendor?
• What are the types, sizes and frequencies of payments?
• Can this vendor accept a card payment today?
• Can vendors be segmented by size or industry?
• Have special terms been negotiated with the vendor?
• Is the vendor new or established?

Experience has shown that vendor enrollment campaigns must be continual.  Vendors who say “no” to accepting electronic payments today may very well say “yes” in 6 months.  Chances are they have other customers who are also migrating to electronic payments and hearing the message from multiple customers will influence their decision.  Changing business conditions may entice them to consider new payment options.  A good rule of thumb is to automatically enroll your new vendors to receive electronic payments as part of the new vendor setup process.

What have your experiences been with vendor enrollment campaigns?  I’d like to hear from you!