Managing the Risk of Foreign Suppliers

Risk management is a daily struggle for businesses that directly affects accounts payable. For a variety of reasons, many corporations today are choosing to import from foreign suppliers. The advantages of using foreign suppliers are many, but the level of risk goes up considerably when foreign imports are employed.

Challenges Dealing with Foreign Suppliers:

  1. Language differences that affect both communication and documentation
  2. International regulations concerning payment methods
  3. Duty and Rate of exchange for payments
  4. Time zone differences that affect shipping cost and delivery time
  5. Product liability in case of loss or harm
  6. Procedures for conflict resolution, such as the location of jurisdiction

Vigilance is required when negotiations are made with any supplier. Vigilance must be greatly heightened when foreign suppliers are involved in business transactions.

AP Automation and Foreign Suppliers

The procedures for transacting with foreign entities are complicated, but accounts payable automation can help a great deal to simplify them. Choosing the suppliers who are the most reliable in the foreign market can be one big key to success. Without the help of AP automation, finding reliable vendors with whom business could be transacted would be a slow trial and error process, guaranteed to result in loss of revenue.

By data mining the information that results from e-invoicing, better choices can be made of foreign suppliers whose record has proven that they are reliable. By the use of automation, contract terms that are beneficial for an individual country can be identified and standardized. Suppliers who hold to those terms or renege on them can be more easily discovered. Difficulties that arise in payment or shipping will be much clearer when they are highlighted electronically.

Dynamic Discounting with Global Suppliers

By means of dynamic discounting, buyers can establish the payment terms that work most efficiently for their own working capital, while building the strong relationships with global suppliers that are necessary in the global economy. In fact, early results suggest that the cash position of global sellers can be improved when dynamic discounting is utilized.

International supplier relationships are a complicated maze, particularly for those who are new to the global market. However, AP automation can provide the direction to navigate the maze more easily.

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