Voice of the Industry

How to future proof your B2B payments stack in a digital transformation era

Wednesday 14 October 2020 09:34 CET | Editor: Alin Popa | Voice of the industry

Digital transformation = B2C/B2B payments + ecommerce + payments platform + Big Data + IoT + APIs + automation => future of payments

With almost every industry webinar you attend or article you read you encounter the word ‘digitalisation’, or more precisely ‘payments digitalisation’. Far from being just a buzz word, payments digitalisation is a historic moment happening now in the world of payments, both for business to consumer (B2C) and business to business (B2B) transactions. And if historically, B2B payments have lagged when it comes to innovation (e.g. manual reconciliation for invoices, lack of payment methods, paying by checks, etc.), current trends have forced companies to modernise how they conduct business with their buyers.

B2B commerce payments digital transformation accelerators

Businesses and industries are evolving digitally and when talking about B2B payments one needs to observe the whole ecosystem interconnected. For instance, when making a purchase, millennials expect their experiences with B2B ecommerce to be as seamless as consumer ecommerce. According to the BNP Paribas Global Entrepreneur Report, millennials are starting their first business around age 27, which is 8 years younger than their counterparts in previous generations. Furthermore, millennials have launched about twice as many businesses as their baby boomer counterparts have.

As the millennials are shaping the modern workforce and entrepreneurship, a surge in online shopping has determined many innovative B2B companies to implement online payment portals to make their B2B transactions with their business as simple and user-friendly as consumer purchases.

The fast-growing ecommerce environment demands better, easier, and safer ways to pay, using any device or channel purchasers prefer, no matter where the buyer/seller is located. This trend translates into a demand for payment globalisation and creating standards and frameworks that remove the middlemen, reducing costs/removing fees and speeding up payments. As Open Banking becomes more of a global market standard, many organisations are adopting Open Banking platforms/open APIs that can connect accounting and payment systems directly to bank accounts, supporting seamless business processes.

Finally, the ‘fast forward button’ for digitalisation has been the current pandemic which has forced many B2B companies to start selling online and reorganise their business operations in a more agile way.

What slows down the B2B payments race

Many businesses are finding difficult to embrace digitalisation and B2B payments aren’t always topping the company’s list of priorities. As a result, the B2B payments and accounting realm has remained riddled with manual processes, disjointed systems, and very long processing times. The high level of manual control and intervention of B2B payments leads to time-consuming work, use of paper documentation/invoicing, which is prone to human errors and fraud.

Furthermore, payments can be slow and expensive, especially across borders. For instance, most B2B players settle their payments using SWIFT bank transfer, and the mechanisms through which businesses make these payments come with manual reconciliation or added fees. Plus, processing payments in regional markets is complex, if we consider regulatory licensing, FX, and cash management.

Inefficiencies in the interaction between large corporations with their suppliers and the lack of ways to pay them faster (late payments), can reduce the cash flow for smaller suppliers and can cause financial penalties imposed to large corporations by regulators. Amid the current pandemic when SMEs need to manage their cash flows to avoid bankruptcy, new companies are finding themselves unable to compete effectively, thus limiting their potential.

Money laundering, account takeover, intercepted payments, business email compromise, check forgery, ACH fraud, and other fraudulent schemes have also challenged the B2B payments, demanding for innovative solutions that help prevent fraud and manage the complexity of compliance.

How to develop a payment stack that meets these challenges

Many sellers and buyers are experiencing significant frustration with the B2B payments process. However, businesses are searching to ease their B2B payments pain points by strengthening their core capabilities, integrating B2B payment processing into existing solution, creating proprietary bundled solutions, harnessing innovation (e.g., cloud, mobile, digital currencies, real-time payments, etc.), and placing emphasis on clients’ broader business needs, not just immediate expectations around the payments process.

Automation is crucial in enabling digital acceptance across B2B payments. By using open APIs, sharing data between different systems is simplified and B2B payments vendors can integrate their systems with ERP and accounting packages, thus creating an automated, collaborative ecosystem. Automation of accounts receivable (AR) processes reduces the time spent on reconciliation, making employees more efficient, enabling companies to use their budget and their workers’ time more productively.

Instant account reconciliation means less fraud. Unlike manual payment processing, an automatic system makes account reconciliation immediate and fraudsters are detected quicker and are less likely to get away with your customers’ money or information.

Maintaining a real-time view into cash flow enables businesses to automate a range of routine or administrative tasks. With software solutions, SMEs can set automatic forecasts to alert when they are close to running too low on cash or to follow up on outstanding invoices. By using data and analytics, business owners can learn about their business via visual graphs and make more informed business decisions.

The corporate cash cycle is a complex structure that involves besides business payments, also procurement, receiving goods, inventory, supplier payments, cash visibility, collections, and analysis. Digitising the cash cycle allows for more efficiency within the payables business process box, as well as more effective communication with other parts of the business flow.

The business case for B2B payments is broad, from serving global trading partners to gig economy participants, all expect faster and cheap digital payments, both domestically and across borders in local currency. Most of these capabilities are supported by partnerships between digital payment players and cross-border payment providers that offer buyers global acceptance of multiple payment methods to meet the payment methods of suppliers.

The current technological solutions enable companies to capture data and insights about customers and partners that help them engage in a meaningful way or implement personalised discounts and incentives that encourage customers to pay immediately.

By using AI and ML solutions, businesses can predict how likely an invoice is to be paid on time. Furthermore, the latest digital advancements can help not only large corporations, but also SMEs react better/quicker to industry changes. For instance, after the pandemic debuted in China, authorities started supporting local enterprises’ digital transformation by accelerating the deployment of big data technology, cloud computing, the Internet of Things (IoT) technology, and smart devices. This initiative made it possible to obtain data of the entire value chain including customers, products, services, marketing, sales channels, and shipping, thus enabling payment service providers to have deeper understanding of various industries and develop more targeted B2B solutions.

An easier, quicker payment process means happier customers

Let’s face it – it’s time B2B payments change once and for all and remove all the inefficiencies that make it an area efficient for some and unprofitable for others. At Worldpay we believe that state of the art integrations that unify data sources and streamline payments and reporting, can help global businesses that deal with legacy B2B payments environments ride the wave of payments digitalisation.

About Lori London

Lori is the Sr. Marketing Manager for Worldpay B2B Payments who focuses on enabling commercial teams, solution specialists, and the organisations they work with by providing thought-leadership content that leverages the industry and business’ latest and most valuable data. Through effective story-telling and primarily digital promotional activities, she drives effective communication that connects organisations with solutions that improve their businesses.

About Worldpay

Worldpay B2B Payments simplifies the complex payment workflows of global B2B commerce through expert ERP integrations that optimise payments throughout the enterprise accounting ecosystem. Our solution allows you to minimize your PCI-compliance scope by tokenising data at the point of entry and throughout the data lifecycle.


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Keywords: Lori London, Worldpay, B2B payments, payments digitalisation, ecommerce, ERP, AP, automation, cross-border payments, cash cycle, fraud prevention
Categories: Banking & Fintech | Payments General
Countries: World
This article is part of category

Banking & Fintech