Change isn’t always good, but it is inevitable. The B2B payments challenges your AP and AR teams are grappling with in the fall will change in winter, change again in spring and change again in the summer. That’s not news to any finance professional, but the pace of that change might still catch you off guard in the upcoming year.
As my colleague Tom Dolan wrote back in March, many AP and AR practices we took for granted over the last decade have become untenable, and an acceleration of digitization and automation is taking place. That brings with it a host of big-picture changes to the way finance teams operate, and there are three themes that demand our attention.
Digital can no longer be ignored
I hate to belabor a point you’ve heard everywhere at this point, but it’s worth the belaboring. Half of all businesses are either actively modernizing their payments programs or embarking on doing so, per Strategic Treasurer. They report that 28% of companies still rely on non-electronic methods for their B2B payments. And 64% of companies make more than half of their B2B payments electronically. Covid-19 was an inflection point. This number was 57% in 2020 and 49% in 2019. Those who still pay via check and have paper-based invoice processes will be left behind.
It took a global pandemic to force some companies to change and they did. The forced work from home model helped companies overcome the traditional objections to digitization based on ERP-related challenges and the number of systems generating payments.
Organizations not making that push now must reckon with the fact that a majority of businesses will have made real efforts to overhaul the way they pay and get paid. That may well mean your vendors will expect to be paid digitally via card or ACH, and that they’ll ask you to stop shipping them paper-based invoices that take extra time and care to process. It almost certainly means that things as simple as dropping checks into the mail and hand scanning and data entry of invoices are set to be competitive disadvantages for anyone who still utilizing them, with all the lack of speed and lack of security those processes imply.
Simply trying to make it through the last two years in one piece was plenty of work, but the need to at least start down the path to more digital operations has been laid bare.
Fraud is evolving with circumstances
Everyone’s aware that fraud is a rising problem, with Strategic Treasurer’s annual B2B Payments survey tells us that 49% experienced a B2B Payments Fraud attempt. The more worrying sign is that the sophistication of the fraud is increasing, too
Bottomline’s Risk and Fraud Prevention Officer Chris Gerda has repeatedly warned of criminals tailoring their messaging to urgent warnings about the pandemic, but that’s just the start of it. The savviest cybercriminals are purchasing toolkits from the dark web and customizing them to defeat the technology built to detect and deter them, and are requesting ransomware payments in cryptocurrency that does not have the traditional controls and oversight that are present if they, say, demanded you cut them a check.
With fraud sophistication growing, vendors must now consider whether their AR departments are being put at risk by payers who are holding their critical account information without robust security in place, to say nothing of payments themselves being misdirected. It’s an omnidirectional problem for finance teams whether you’re paying or getting paid, and it only takes one click in an email you didn’t scrutinize enough to kick that problem into gear.
That’s to say nothing of internal fraud, where the controls need to be tighter and the security solutions more robust with remote work making oversight more difficult. The global circumstances favor fraudulent actors, and that’s not going to change any time soon.
Business continuity will be a major focus
Back when COVID-19 first started to rage across the nation and around the world businesses were forced to grapple with how to conduct business safely and smartly, the lack of comprehensive business continuity plans was exposed pretty much everywhere. Bottomline Executive Vice President and Global Controller Eric Morgan said in the early months of the pandemic that most finance teams had continuity plans for natural disasters that might hamper operations for a day or two, but a long term or even a complete, move to remote operations was more than anyone could have anticipated.
That lack of readiness, while understandable, had profound effects on business operations everywhere. Companies that experienced that remarkable shift now understand that long-term business continuity planning is essential. And that the impact on a business's bottom line and employee's productivity can be profound unless there’s a concrete and actionable roadmap.
It may seem odd to be looking this far ahead, but the last two years showed us it’s better to be on your toes than caught flat-footed when the AP and AR landscapes shift. Make no mistake, the changes we’ll see in the next several months may not draw the kinds of headlines that COVID-19 sparked, but they will impact the way your finance teams operate.
The Bottomline: Being aware of the increased need to digitize, being vigilant about fraud, and future-proofing your operations will be the best way to thrive in 2022 and beyond.
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Paul McMeekin, VP solutions marketing and channel sales enablement, has a passion for building high performing teams and disciplined marketing which has been proven to efficiently grow the business. This is achieved through formulating key strategies, precise market positioning, creating unique value props and executing campaigns.