Packaging suppliers play a crucial role in the supply chain, providing essential materials to industries ranging from food and beverage to retail and manufacturing. However, the unique demands of this sector—frequent orders, high transaction volumes, and complex credit terms—create significant challenges in managing payments and accounts receivable (AR).

In this article, we’ll explore the pain points packaging suppliers face in their payment processes and how automation can enhance AR management, reduce manual tasks, and boost efficiency.

Challenges in Payment Processes for Packaging Suppliers

Packaging suppliers often operate in fast-paced, high-demand environments, making efficient payment processes essential. However, they face several challenges:

1. High Transaction Volumes

With frequent small orders and a wide customer base, packaging suppliers process a large number of invoices every month. Managing these transactions manually can lead to errors, delays, and inefficiencies.

2. Varied Payment Terms

Packaging suppliers often offer payment terms like Net-30 or Net-60 to accommodate their clients. However, these terms increase the risk of late payments, creating cash flow challenges.

3. Manual Data Entry

Traditional payment processes involve significant manual effort, from issuing invoices to reconciling payments. This not only consumes valuable time but also increases the risk of errors.

4. Late Payments and Debtor Days

Late payments are a common issue in the industry, leading to extended debtor days and reduced liquidity. Chasing overdue invoices adds to the administrative burden and can strain customer relationships.

5. Lack of Visibility

Without centralized, automated systems, tracking payment statuses and outstanding balances can become cumbersome, impacting financial decision-making and planning.

Why Packaging Suppliers Need Automation

Automating payment processes can address these challenges head-on, helping packaging suppliers streamline AR management, reduce manual tasks, and improve cash flow. Here’s how:

1. Digital Credit Applications for Customer Onboarding

Traditional credit applications often involve paperwork and back-and-forth communication, delaying the onboarding process. With digital credit applications, packaging suppliers can:

• Verify customer data automatically, including ABNs and financial information.
• Assess creditworthiness in real-time, reducing the risk of bad debts.
• Collect payment details upfront for added security.

This ensures that new customers are onboarded quickly and reliably, setting the foundation for smooth transactions.

2. Automated Invoicing and Payment Reminders

Manually issuing invoices and following up on payments can be a drain on resources. Automation allows packaging suppliers to:

• Generate and send invoices automatically as orders are processed.
• Set up payment reminders to notify customers of upcoming due dates.
• Auto-bill stored payment methods on the due date, ensuring timely payments.

These features significantly reduce administrative workload and minimize overdue payments.

3. Custom Payment Plans for Flexibility

Customers in the packaging industry may occasionally struggle with cash flow, especially in challenging economic times. Automation enables suppliers to offer flexible payment plans, allowing customers to:

• Consolidate overdue invoices into manageable installments.
• Set up auto-billing for payment plans, ensuring compliance with agreed terms.

This approach helps maintain strong customer relationships while ensuring that payments are collected.

4. Seamless Integration with Accounting Systems

Automation tools like PencilPay integrate with popular accounting platforms such as Xero, QuickBooks, and Cin7 Core. This integration offers:

• Real-time syncing of payment data, eliminating the need for manual reconciliation.
• Accurate financial records, ensuring compliance with accounting standards.
• Easy tracking of payment statuses, giving suppliers greater visibility into their AR performance.

Case Study: A Packaging Supplier Transformed with PencilPay

One packaging supplier, struggling with overdue payments and a heavy administrative workload, turned to PencilPay for a solution. By implementing PencilPay’s digital credit applications, automated billing, and integration with Cin7 Core, the supplier achieved:

• A 40% reduction in debtor days.
• Significant time savings, freeing staff to focus on customer service and growth initiatives.
• Improved cash flow, enabling timely reinvestment in their business.

With PencilPay, the supplier not only streamlined their AR processes but also enhanced customer satisfaction through transparent and efficient payment management.

Benefits of Payment Automation for Packaging Suppliers

By automating payment processes, packaging suppliers can unlock several key benefits:

• Time Savings: Eliminate manual tasks like data entry and payment follow-ups.
• Improved Cash Flow: Ensure timely payments with automated billing and reminders.
• Reduced Errors: Minimize human errors in invoicing and reconciliation.
• Stronger Customer Relationships: Offer flexible payment options and clear communication.
• Scalability: Handle high transaction volumes effortlessly as your business grows.

Conclusion: The Future of Payments in Packaging

For packaging suppliers, efficient AR management is critical to maintaining profitability and supporting growth. Automation offers a proven way to overcome industry challenges, reduce manual work, and improve cash flow.

With PencilPay’s suite of tools, packaging suppliers can streamline customer onboarding, automate billing, and gain real-time insights into their AR performance. The result? A more efficient, scalable, and customer-focused business.

Ready to transform your payment processes?
Book a Demo Today and see how PencilPay can help your packaging business succeed.