Mastercard & Taulia: Unlocking Supplier Payment Solutions

Procurement and supplier management are central to the operational success of any business.

These processes not only involve the sourcing of goods and services required by companies but are also crucial in cultivating and maintaining strong supplier relationships that are ideal for both reliable supply chains and financial stability.

The fintech leader Taulia, in partnership with financial services giant Mastercard, has recently brought to light some concerning trends in their research findings.

An alarming 92% of suppliers reportedly begin billable work for new customers even before they become approved suppliers. This prevalent practice unveils potential risks, including the dangers of non-payment, litigation, and damage to reputation.

San Francisco-based Taulia offers solutions in working capital management, helping businesses free up funds stuck in payables, receivables and inventory.

Its adoption by SAP in 2022 has only broadened its scope. Through its platform, Taulia processes over US$500bn each year, supporting suppliers by facilitating early payments and fostering resilient supply chains. Global enterprises like Airbus, AstraZeneca, and Nissan are amongst those that leverage Taulia’s offerings to maintain fluid, sustainable supply chains.

The recent Taulia report underscores how existing procurement processes in supplier management may be stifling these relationships, suggesting potential for innovative approaches that could expedite onboarding and payment procedures.

Exploring Supplier Risks and Digital Obstacles

The joint study by Taulia and Mastercard reveals that a significant 49% of suppliers often commence work for new clients without previous approval.

This includes 20% who say they “always” engage in this manner, and 29% who generally do. Such practices leave businesses vulnerable, operating without clear contractual agreements, which can expose them to substantial financial and legal hazards.

The most cumbersome hurdle for suppliers is often the task of signing up to new supplier portals. Half of the survey's respondents find this the most challenging aspect of establishing new client relationships, a figure markedly higher than those dismayed by due diligence tasks, who account for just 24%.

Additionally, suppliers face issues such as complex systems, problems sharing data, and difficulties in integrating with existing Enterprise Resource Planning (ERP) systems, all of which can create payment delays and financial planning challenges.

Taulia attempts to address these challenges head-on, especially for smaller companies grappling with limited cash flows, with its Virtual Cards solution that integrates seamlessly into ERP systems, offering a pathway for quicker, streamlined payments.

Despite these solutions, virtual cards remain underused, with a majority of transactions still processed through traditional methods like wire transfers.

Innovations in Payment for Supplier Security

Reliable, quick, and transparent payment solutions are highly valued by suppliers, according to Danielle Weinblatt, Chief Product Officer at Taulia. "Our report has highlighted that suppliers are looking for payment methods that are reliable and offer near-instantaneous payments to their accounts," she explains.

However, the traditional payment methods such as paper cheques still prevalent today pose additional challenges related to cash flow and reconciliation for suppliers.

By contrast, virtual cards present numerous benefits including faster processing, superior control over expenses, and enhanced security. "Suppliers want visibility and transparency as to how they are getting paid," states Rebecca Meeker, Senior Vice President of B2B partnerships at Mastercard. "They also want the option to be able to accelerate payment, which the virtual card provides.”

These advantages could distinctly change supplier confidence, facilitating their willingness to perform pre-contractual work. Yet, these benefits are still untapped by a large segment, offering ample opportunities for broader adoption in future payment solutions.

Both Taulia and Mastercard’s report throws a spotlight on the urgent need for payment innovations that cater to both buying and supplying parties.

Advancements that simplify supplier onboarding and provide quicker, more secure methods of payment can notably strengthen business relationships and uphold sustainable supply chains.

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