Forget about reducing price, it’s increasingly about looking long-term - companies generally want longer and more strategic relationships with their suppliers

9 October, 2019

Travel buyers and suppliers should take notice of new research from Barclaycard that highlights a move towards longer-term business partnerships. While, the study is not industry specific and UK-centred, the poll of over 500 UK senior procurement decision‐makers in companies with at least 250 employees and who have a turnover of at least GBP6.5 million, provides valuable insights into procurement trends and the changing dynamic between buyers and suppliers.

Six in ten procurement decision‐makers in the study said that their current contracts with suppliers last at least two years and more than two-thirds (69%) are now looking for longer‐term relationships with their suppliers than five years ago. Procurement leaders are also more concerned about the reputational damage caused by poor supplier management, with 65% saying that they are now more concerned about the public perception of how their company treats suppliers.

It’s all rather positive news from the study. More than three-quarters (76%) of respondents said they communicate with suppliers about strategy more than in the past, a slightly smaller number (73%) said supplier relationships are now more mutually beneficial, while more than half (61%) are now more concerned with paying suppliers on time than five years ago. Just under half (48%) said they communicate with suppliers at least once a week.

But, while there is improved intent to pay suppliers, with respondents saying this is achieved 73% of the time, on average, perhaps thanks to “increasing pressure” from the government to meet agreed payment terms of smaller suppliers, three in ten still cite slow internal processes as one of the main reasons with a similar number saying they would like to simplify their procurement processes to ensure suppliers are paid more quickly, in order to improve supplier relationships.

A perfect backdrop to promote Barclaycard Commercial Payments’ new an online hub designed to smooth the process of making payments. Precisionpay Hub has been designed to remove obstacles in the existing procurement process, making it easier for buyers and suppliers to interact and get the payment process and terms to suit them both, mainly using virtual cards and bank payments.

Suppliers using the service can reduce DSO (Days Sales Outstanding) by requesting early payment from the buyer in exchange for a discount. Buyers will also gain from faster invoice processing. Suppliers can also manage risk more effectively by gaining greater visibility of overdue payments.

“It’s encouraging to see that UK businesses are looking to develop longer-term and more collaborative supplier relationships, built on trust and transparency,” says Marc Pettican, CEO, Barclaycard Commercial Payments. “However, in order to achieve this, it is vital that they have access to tools and systems that help them communicate with service providers effectively.”

“By connecting businesses directly to their suppliers, we hope to simplify the procurement process, saving both parties time and money, while ensuring suppliers get paid on time more often," he adds.

The pace of business has increased, and individuals are being asked to focus on more strategic elements of relationship management. It is appearing there are clear moves towards building trusted long-term partnerships in business rather than just securing big cost savings, something that some in the travel and hospitality sector are already adapting to, for others it could mean a significant change in mindset.