3 Gold Standard Ways To Pay Your Hotel Vendors
by Jacob Statler
It’s Thursday, and you’re staring at an email, desperately trying not to freak out.
Your liquor vendor emailed to let you know your account is on hold due to non-payment — they’ll only deliver if you pay COD.
Cool, cool.
Your hotel is completely booked this weekend, plus you’re hosting 3 events requiring full bars at each — deposits were taken, and contracts signed.
This is the 3rd time in 11 months this has happened because of no payment. It’s not that your hotel didn’t pay. But, batching checks is slow, and the mail is slower.
Your vendor is fed up with late payments.
You take a deep breath, get your groveling groove on, and dial your vendor’s number…
To say that vendor relationships are “important” is kinda like saying oxygen is “important” to humans. True? Sure, but it doesn’t seem to speak to the weight of the matter, does it?
Promptly paying your vendors should be a top priority to ensure your hotel’s operation continues to run smoothly. Keep in mind, if deliveries get put on hold because of non-payment, you’ll lose revenue and your customer satisfaction will take a hit.
Does your hotel have a streamlined system to pay hotel vendors efficiently while getting you discounts?
Today, let’s chat about the best way to pay hotel vendors while saving money at the same time. We’ll cover:
- Hotel vendor accounts are complex
- Your hotel vendor payment process dictates your vendor relationship
- 3 ways to pay hotel vendors
- Efficient hotel vendor payments require innovative technology and a willingness to evolve
- Hotel vendor payments impact your hotel’s success
Hotel vendor accounts are complex
Hotels are essentially businesses within a business. Under the umbrella of hotel operation falls many departments with a ton of moving parts that need to be managed.
Managing vendors, contracts, and invoices/payments within each department is intricate. Efficiently paying hotel vendors is an integral part of this process.
Think of all these hotel departments with a complete list of their own vendors:
- Rooms department
- Administration
- Food & beverage
- Housekeeping
- Maintenance
- Landscaping
- Reservations
- Live entertainment
- Sales and marketing
- General
Factor in hotel groups with multi-properties managing hotel suppliers across the properties, and you’ve got a tightrope juggling act fit for Barnum & Bailey’s.
You can’t let your vendor payment process fall through the cracks.
Your hotel vendor payment process dictates your vendor relationship
Your vendors are the lifeblood of your hotel operation. It’s vital to nurture those relationships. You’re not the only hotel your suppliers are servicing, and it’s critical to make sure your vendor relationships are taken care of and nurtured.
So, how do you do that?
In the business world, nurturing relationships mainly looks like paying vendors ON TIME. Big fat bonus points if you pay EARLY.
Your payment process needs to be as efficient, streamlined, and speedy as possible.
The long and the short of it is this — your hotel vendors need to be paid promptly every time to ensure the continual flow of supplies to serve your guests.
When vendors feel appreciated & are regularly paid on time for their services, your relationship flourishes.
When it comes to paying your hotel vendors, you’ve got options.
3 ways to pay hotel vendors
As we go through these 3 ways to pay your hotel suppliers, ask yourself about your current payment method(s):
- Is it working well?
- Are your hotel vendors consistently paid promptly?
- Do you find yourself regularly calling vendors to apologize for late payments?
- Do you spend too much time putting out fires caused by slow check processing and snail mail each month?
If you answered ‘no’ one or more times, keep reading for a golden nugget or two.
1. Virtual Cards
Virtual cards (aka vCards) are randomly-generated 16-digit numbers linked to an underlying bank account that can be used in any online payment portal set up for credit cards.
vCards can be single-use or multi-use numbers that, when used, link those charges back to the bank account without exposing the real account numbers.
They’re pretty fabulous and come bearing a bouquet of benefits:
- Reduced fraud risk — Your real account numbers stay hidden and protected.
- Faster — It’s no secret that the USPS has gotten slower. So, unfortunately, checks mailed to your hotel vendors might take even longer than before. The old excuse “check’s in the mail” isn’t funny anymore, because it’s painfully true.
- Early-payment discounts $$ — When your hotel suppliers get paid on time regularly, they’re more open to chatting about early-payment discounts, which saves you money.
- Cash back — vCards like the Plate IQ Card offer up to 1% cash back on vendor payments — rebates that beef up your cash flow while getting your hotel vendors paid faster.
- Innovative & scalable — Using vCards to pay hotel vendors is forward-thinking and positions your hotel for scalability. According to a Juniper Research study, Virtual Cards — The Future B2B Solution, the global value of vCard transactions is predicted to reach $6.8 trillion in 2026, a jump from $1.9 trillion in 2021. 71% will be B2B transactions.
- Whittle down costs — vCards are cheaper than checks. For example, it costs nothing to generate and send a vCard vs. payment by check processing + postage + envelopes for checks.
- Convenience — vCards enable hotel staff to buy consumer-grade items quickly online (e.g., flat-screen TVs from BestBuy or Amazon). In contrast, traditional procurement can take weeks or months.
✷Money-saving fact — Online discounted prices are often cheaper than placing orders through procurement.
Virtual cards are innovative, safe, fast, cost-efficient, and set your hotel up for future success.
2. ACH
ACH stands for Automated Clearing House — an ACH payment is a type of electronic bank-to-bank payment made by transferring funds, run by NACHA (formerly National Automated Clearing House Association).
Think ACH vendor payments are outdated? Think again — in 2020 alone, over 4 billion B2B ACH payments were made.
Let’s hit the pros of using ACH payments for your hotel suppliers:
- Lower cost — Paying your vendors with an ACH payment costs between $.26 — $.50 vs. paper checks which run anywhere from $2.01 — $4.00.
- Reduced fraud risk — ACH payments are electronic payments which means you can skip mailing checks, reducing your fraud risk of checks getting intercepted.
- High efficiency — Issuing ACH payments is more efficient than paper checks, which gets vendors paid faster.
- Early-payment discounts — While ACH payments aren’t as speedy as vCards, they still get the bills paid much faster than paper checks. That opens the door to asking your vendors for early-payment discounts.
3. Checks
Paper checks date way back in history — the first checks appeared in the U.S. around the end of the 17th century, and caught on like wildfire.
Today, while we’ve got other options for vendor payments, there are times when it still makes sense to pay a hotel vendor with a check.
When you need to pay a vendor with a check, Plate IQ’s gotcha covered — they’ll let you cut a check within the software, then print and mail it for you, saving your bookkeeper valuable time.
There are a few facts to note about paper checks:
- Longer processing time — Many still hotels pay most vendors with checks batched weekly. Check-batching means it’ll take longer to get that invoice paid.
- Checks can get lost — Between stuffing envelopes with checks and sending them through the snail mail system, there’s more opportunity for checks to get lost or swiped.
- Checks are spendy — According to a Payments Costs Benchmarking Survey for the Association of Financial Professionals, the average cost per check is $3.00. So if your hotel issues 1000 checks per month, that’s a cost of $3,000 per month or $36,000 per year!
Efficient hotel vendor payments require innovative technology and a willingness to evolve
Streamlining your hotel operations, including vendor payments, is future-thinking, just like when you transitioned to accepting credit cards as payment for guests’ rooms when cash or checks used to do just fine.
The reality is, your hotel may have to change some processes to keep up with the times. Digitization & technology are part of that evolution.
The world is in a digital transformation — your guests want to check in & out on an app and unlock their doors with their phones.
Your vendor payment process needs to evolve too. It’ll save your hotel valuable time, boost vendor relationships, pad your bottom line, and set you up for success as the digital age continues.
Hotel vendor payments impact your hotel’s success
You know that your hotel depends on stellar vendor relationships. Streamlining how you pay hotel vendors powers long-term, solid vendor relationships.
The success of your hotel relies on your operation running smoothly and the supply chain continually flowing.
Transitioning to digital payments will get your vendors paid faster, keep them happy, and open up discount options for you.
Find out more about how the Plate IQ Card can revolutionize your vendor payment process.
Jacob Statler writes about the unique challenges of hospitality AP automation for Plate IQ.
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