Clinging to outdated B2B payment technology has unwanted effects that go far beyond what organizations realize. Businesses of every kind are paying extra (and taking bigger risks) every time they use antiquated tech in a steadily modernizing payments ecosystem.
In a recent episode of The Payments Podcast, Bottomline’s Tom Dolan, CRO for Corporate NA, and Paul McMeekin, Vice President for Paymode Marketing, explored the struggles businesses face when relying on outdated technologies.
Going for the weakest link first, Dolan said paper-based processes remain surprisingly prevalent – regardless of their hidden price. "The high costs associated with paper invoices and payments continue to burden businesses unnecessarily”, Dolan said.
What’s more, he added that expenses keep accumulating due to manual processing, error correction, and the infrastructure required to maintain physical document workflows.
Vendor management is another area of unnecessarily high B2B payment costs.
Dolan pointed to the annual vendor turnover most businesses experience, averaging roughly 15-20% across all industries (construction, real estate, and healthcare see even higher attrition). This constant flux requires dedicated resources to manage onboarding, payment information updates, and customer relationship management.
"Companies often don't realize how much they're spending to maintain these outdated systems until they examine the complete picture, including staff time, error correction, and missed opportunities for optimization," McMeekin said, underscoring the fact that many organizations fail to calculate the true cost of using outdated payments systems.
Legacy System Risk: Like Leaving Your Doors Unlocked
Outdated payment technologies also create serious security vulnerabilities that modern systems are specifically designed to address. Weaknesses in older systems expose businesses to various forms of new payment fraud, including Generative AI deepfakes.
"You need focused expertise to manage vendor onboarding and digital payments to avoid payment fraud," Dolan said. Without modern security protocols and verification systems, businesses face increased exposure to cunning fraud attempts. Modern payment networks incorporate multiple layers of security that legacy systems can’t match.
Critical capabilities now include vendor validation, automated compliance checks, and real-time monitoring that can identify suspicious patterns before payments are processed.
"The threats businesses face today are far more sophisticated than even five years ago,” McMeekin said. Put another way, using outdated technology is like leaving your doors unlocked in a high-crime neighborhood.
Operational Inefficiencies Across AP and AR Functions
Also up for discussion was how outdated technologies create operational bottlenecks that affect both accounts payable (AP) and accounts receivable (AR) functions.
"The fragmentation of payment sources over the years and the manual effort required to manage remittance information" creates significant inefficiencies, Dolan said, describing one particularly difficult scenario that many businesses face today.
There are plenty of inefficiencies to go around. Businesses today receive payments through multiple channels, for example, but outdated systems force staff to manually reconcile these transactions across different platforms. This technical fragmentation extends to cash application processes, where AR teams must navigate multiple vendor and bank portals to match payments with invoices.
Without integrated solutions, this process becomes labor-intensive and error prone.
"When finance teams spend most of their time on manual processes, they have little capacity for analysis and planning,” McMeekin said of the impact on decision-making. “This prevents [finance teams] from contributing strategic value to the organization."
Cash forecasting and its unique issues with outdated tech didn’t escape scrutiny. Dolan said "The inefficiency and inaccuracy of using spreadsheets for cash forecasting" remains a persistent problem for organizations relying on legacy systems and processes. It often leads to major variances in cash forecasting, which creates added uncertainty for financial planning.
Taking Payments from Cost Center to Cash Cow
As digital transformation continues, certain solutions and emerging technologies are reshaping the payment landscape. Artificial intelligence (AI) emerged as a key technology transforming payment processes during the discussion.
Dolan highlighted Bottomline's implementation of AI tools to prevent fraud and optimize processes. The new generation of AI solutions can analyze patterns, identify anomalies, and automate routine decisions, improving efficiency while reducing risk.
Data analytics represents another crucial area for innovation. By leveraging payment data effectively, businesses can make more informed decisions about cash management, vendor relationships, and payment timing, among other useful capabilities.
It’s how B2B payments are generating rebates and discounts by timing payments with total precision. Turning back-office functions into moneymakers is part of B2B’s digital dream.
Additionally, modern systems turn payment data into actionable insights that drive business value, Dolan said, offering this guidance to CFOs and Treasurers: "Keep your eyes open and venture out to understand the market and its impact on your [client] companies."
McMeekin also stressed the importance of staying informed about available technologies and their potential applications. He invoked "The old adage that 'the best time to modernize was five years ago, the second-best time is today,'” adding, “Understanding the use cases and implementing the right technology can transform payment operations from a cost center to a strategic advantage."