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Greening the Supply Chain: What Suppliers Can Do to Drive Sustainability

In conducting research for last year’s Perceptions study, we learned that most suppliers still submit a significant portion of their invoices via paper, even though there are other non-paper options available. Furthermore, most suppliers still receive payment via paper check. Although electronic and more automated methods offer faster invoice submission, quicker payment and added convenience for administrators, familiarity is perhaps the most common driver why organizations still rely so heavily on paper for invoice submission and payment. We’d like to offer another consideration for the transition to electronic methods: sustainability and lessening the supply chain’s impact on our environment.

The results of the Perceptions study are particularly intriguing because respondents indicated that although most of them receive payment by paper check from at least a segment of their customers, most would prefer to receive payment electronically (e.g. ACH) For those strongly considering a transition to electronic, here are a few of the most common ways suppliers can drive sustainability.

Transition to e-Invoicing

Suppliers looking to drive sustainability can begin by evaluating how their organization can begin submitting invoices electronically. EDI (Electronic Data Interchange) can be expensive, but if suppliers can find value in the investment with a large customer, it may be worth considering. Outside of offering their own in-house technology solutions, suppliers can also leverage many third-party e-Invoicing networks – many of which facilitate payment, including early payment. There are other low-cost solutions for small businesses such as QuickBooks, FreshBooks, and Xero where an invoice does not necessarily have to be printed at either end of the transaction.

Reinforce sustainability with electronic payment

When receiving payment, some suppliers simply take checks because it’s seen as easier and more familiar – even if there is an existing option to receive payment electronically. The conventional wisdom is that checks may offer the best way of receiving the corresponding remittance data with the payment, but advances in technology and more refined standards prove that remittance data is now commonplace among electronic payment methods.

For organizations interested in accepting ACH payment, same-day ACH will make it’s debut later this year. Not only will suppliers be able to accept payment electronically once their customer approves the invoice, they will be able to receive payment almost instantaneously.

If your organization truly wants to drive sustainability, it may make sense to strongly encourage your customers to investigate the non-paper options available.   Your organization may not completely rid itself of all paper transactions, but a start on this path can at least address a portion of its paper.

Get in the cloud

What many organizations may not realize is that with the advent of the cloud, suppliers are now able to keep “digital” archives of important files and process documents, without the need for cumbersome paper copies. This enables organizations to reduce the paper needed to run the business.

To support the notion that electronic practices can have a positive impact on the environment, we point to a case study involving Mohawk Industries. Mohawk, a leading provider of flooring for both residential and commercial applications, eliminated paper invoice acceptance from their suppliers and transitioned to an e-Invoicing solution. The result? With the help of its suppliers, Mohawk was able to eliminate 6 million sheets of paper from their operation and the environment by going digital; an equivalent savings of 700 trees, 85 barrels of oil, 173,000 kilowatts of energy and more than 2,500 pounds of air pollution! [i]

As you can see, with just a few small tweaks, suppliers can play their part in driving sustainability. Think about it: by leveraging the latest technology, how much of an impact would your organization have on the environment?

[i] http://www.environmentalleader.com/2010/09/08/how-e-invoicing-can-save-a-small-forest/

Ernie Martin is Founder and Managing Director of Receivable Savvy. He brings over 25 years of experience in financial supply chain management, marketing and communications and draws upon his extensive experience to share knowledge and best practices with AR professionals. His resume also boasts time at several well-known brands and companies such as Tungsten Network, Delta Airlines, CIGNA Healthcare and Georgia Pacific as well as a number of years as an independent consultant.

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