Blog

Eliminating payment disputes to drive business success

There’s plenty to keep today’s finance leaders awake at night. In this context, routine tasks like payments need to just work. But unfortunately, that’s often not how things pan out. In fact, thanks to the inadequacies of legacy processes, disputes can occur between buyers and their suppliers which require extra time and resources to resolve. The cumulative effect of these disputes, and the ill-will generated with suppliers, can be a major block on productivity and growth. It can hit margins and may even lead to greater fraud losses.

The answer is to invest in digital platforms which provide improved visibility and control for finance teams, reducing risk and ensuring payments get delivered directly, on time, and to their intended recipients.

Manual errors mean extra work

Disputes usually arise because of the manual, error-prone nature of traditional B2B payment processes. There are typically two types of B2B payment dispute. The first involves a buyer raising questions over a supplier invoice. It might be that there’s an error in the invoice, it was sent to the wrong department, or even that the goods/services delivered were not up to scratch or didn’t arrive.

Invoice issues are common. In an Optal poll of FTSE 350 finance leaders, over a third (38%) admitted that up to 40% of invoices from their suppliers require some kind of follow-up interaction due to disputes, suppliers chasing money, or other reasons. In nearly half (49%) of these cases, this requires the involvement of between one and five staff members.

In the second scenario, the supplier has an issue with the buyer’s payment, either because it hasn’t been received, it’s for the wrong amount, or even that it’s been intercepted by fraudsters. Sometimes the supplier is not able to identify if they’ve been paid correctly or not because there’s not enough reference data accompanying the payment. This is especially true for invoices with multiple items, or multiple invoices paid together. Optal found that almost half (49%) of FTSE 350 organisations made supplier payment mistakes on occasion.

Finance headaches

All of which raises several key challenges for finance leaders:

  • Getting payment reference data correct, keeping it up-to-date and secure
  • Adding more information to the payment transaction so suppliers know what they have been paid for
  • Gaining visibility into the status of transactions once they’ve left the corporate account, so supplier queries can be handled quickly
  • Minimising the extra cost and risk of funds going awry: for payments using bank transfer the sender is legally liable

Eliminating disputes with VANs

Fortunately, there are digital payment alternatives to cheques and bank transfers which take the pain out of payments and minimise the chance of disputes. Virtual Account Numbers (VANs) are single-use, 16-digit card numbers that can be used to pay suppliers seamlessly.

VANs:

  • Allow buyers to add supplier reference info like PO and invoice numbers to the transaction so they know exactly what they’ve been paid for;
  • Offer transaction status info so buyers know when payment has been received;
  • Offer the supplier immediate and guaranteed payment;
  • Provide a solution free from manual error;
  • Enable recovery of some or all of the payment amount in the event of faulty/poor service or goods never arriving, via the chargeback process.

Best of all, by eliminating disputes via seamless, accurate digital payments, organisations can preserve important supply chain relationships and focus on their most important task — growing the business.

To find out more on how VANs could transform your payment processes, read Optal’s latest report, Do you have a VAN plan?

Contact details:

Bradley Eccleshare
Optal Director of Marketing

M +44 0 7525 929198
T +44 0 20 3892 4928
bradley.eccleshare@optal.com

About Optal Ltd

Optal is re-inventing how payment processes work across complex industries. By stripping payment processes of their customary inefficiency, Optal helps companies boost profitability across a growing number of sectors around the world.

Optal issues Mastercard branded payment products, driving its focus on developing and bringing to market, game-changing payment solutions.

Talk to us to discover how Optal can add value to your organisation.

General enquiries: +44 (0)203 892 4928
Business Development: +44 (0)333 230 1842
Invapay Technical Support: +44 (0)3308 387 490
Press & Media: +44 (0)203 772 8842

info@optal.com


View our offices

Sign up:

Subscribe to receive the latest thinking, white papers and articles.
  • By pressing “subscribe”, you agree that Optal may collect your full name and email address so we can add you to our subscriber list to receive marketing material, newsletters or general information about the Optal group’s services. We will only use your information for the purposes set out in our Privacy Notice. If you wish to unsubscribe you can do so at any time by emailing us at unsubscribe@optal.com or by clicking on the unsubscribe link at the end of any marketing email you receive from us.
  • This field is for validation purposes and should be left unchanged.