Business payments experts debate the path to AP automation

Corporate Payments And Payables

Gunita Bindra

Gunita Bindra

Jun 9, 2022

Take the Strategic Treasurer 2022 B2B Payments survey here.

As I wrote last week, business payments and accounting for them in the back office is a running battle between analog and digital. Or put another way, between manual and automation. Exactly how to push toward the more efficient process is a matter of healthy debate. As Bottomline and Strategic Treasurer prepare to repeat the extensive B2B Payment Survey this year we gathered three of my colleagues to look at last year’s results and handicap them for this year. This time, I’m the interviewer. Our experts: Paymode-X general manager Tom Dolan, VP solutions marketing Paul McMeekin and senior director of partnerships Justin Corum. They don’t agree on everything, and we’d love to hear your take on our LinkedIn page.

Q: Last year 28% of respondents expected payment type growth to come from virtual cards. Do you expect this to increase in the 2022 survey? Why or why not?  

McMeekin: Virtual card adoption is booming. For some laggards the jump from check to card feels easier. They likely have a card in their personal life and are used to it. From an acceptance perspective, suppliers who may be feeling the pinch from a cashflow perspective know they can get cash in their bank accounts faster and reduce their days sales outstanding.

Dolan: I agree, Paul. The use of virtual cards will increase. The two huge factors are checks and ACH. As checks transform into digital payments, virtual cards are easier to work with from a payer’s perspective. As checks decrease, the convenience and monetization of virtual cards means they will grow faster.  

Corum: I’m going to disagree on this one. The way I see it, vCard growth is anemic this year due to continued high commercial card interchange rates and the manual processes of acceptance.  With card networks doling out custom rates to the acquiring world and firms like Billtrust and Versapay providing virtual card capture capabilities, vCards will start to take a slice of the B2B payments space. But it will take much longer than folks would like to think.

Q: Justin, since you were the contrarian, let’s start with you. In 2021 64% said they were making more than half of their payments electronically. 1) Why is that number so low in your opinion and 2) How do we increase it? 

Corum: No one likes to say it but checks still work and that hinders the value prop for automation for some companies. As a buyer, I know where to send the payment and I know I have some float.  As a supplier, I don’t have to think about a check.  It’s sent to my lock box provided by my bank, and I get a BIA2 file at the end of the day with all the details.  How do we increase it?  By balancing this B2B ecosystem to include receivables. Value has to be present on both the buy and supply side. Otherwise, Grandma’s preferred payment method for groceries will continue to dominate.

Dolan: First, I’d say the number is still low because so many companies aren’t aware of outsourced payment options, especially among SMBs and the middle market. It’s tough to manage that transition in house. Market awareness and education is needed. Perceived lack of control is difficult to counter for finance professionals because so many don’t know the visibility and auditability that digital payments can provide.

McMeekin: Over the past two weeks I’ve had a couple of telling, casual conversations with people in the industry. One person said they’d be interested in talking more deeply once their AP clerk retired, saying: “She’s just used to writing checks and she’s been here for over 30 years, we would love to automate once she’s retired”.  The other person just said checks work. As Justin said, I can control the float. They were not aware of rebates. And are now considering the value of rebates vs the value of the float. We as payment professionals need to get out of sales mode and into education mode. Payments might be the first thing we think about every day, but they’re not for somebody in finance battling inflation, working with suppliers and renegotiating commercial loans among other things.

Q: Paul, back to you. Last year 65% of corporates said they prefer a single solution for business payments. Why is it so important to have a single provider and do you see the business headed this way? 

McMeekin: They are absolutely headed that way. Sending one single file to one payments provider is the dream.  Send one file, and that provider can cut checks (booooo!!!), send ACH, make virtual card payments, send payments internationally. A single solution would make it super easy for the companies who want this.

Dolan: I would expand that to AP Automation. These are critical functions and the more payments you can consolidate to one partner and gain efficiencies of the operational partnership the better. It really is a scale game. 

Corum: The reality is suppliers are indifferent to “TYPE” – what they really want is consistency in payment timing, consistency in cost, and consistency in data/process.  They could care less if it says MC or Visa or is an ACH or a pigeon – they want consistency and ubiquity in acceptance.

Participate

Add your voice to this year’s results by taking the survey here.

Related topics

Ap Automation B2B Payments
Gunita Bindra

Posted by

Gunita Bindra

Product & Growth leader for global companies with 10+ years experience in developing and executing strategic products and partnerships for evolving business needs. Expertise in evaluating market trends and transforming them into high-performing business strategies and creative solutions for the customer. Wide sphere of B2B experience across Product, Sales/Business Development, and Technology functions.
Browse all posts
footer curve