Why efficiency is not enough for B2B payments

Corporate Payments And Payables

Tom Dolan

Tom Dolan

Apr 6, 2021

Automation is the story we hear over and over again when it comes to accounts payable and accounts receivable. Heck, it’s a story we tell over and over again. It’s just that automation is really part of a larger story about efficiency, and increasingly efficiency seems part of a much larger story about flexibility in a changing world.

Businesses know what they want in 2021 when it comes to their accounts payable processes: Simple, fast, secure, and above all tailored to their specific needs. If they can work within the cozy confines of their ERP and from remote workspaces, if they can tailor workflows to take away manual work, and if they can make their vendors happy, accounts payable teams and the larger organizations they belong to are pretty happy themselves. They’re also a more efficient operation, and as we’ve learned the hard way in the past year plus, not being efficient and flexible has significant costs for businesses.

The question everyone is asking—and we’re asked it all the time—is how do you help me achieve that flexibility with as little disruption as possible? It won’t shock you to know the answer to that particular question is always evolving, but right now the focus in the B2B payments space is on three items in particular.

Recognize the value of relationships

There was a time in the not-too-distant past where payers dictated the relationship with vendors, setting payment terms and types without much in the way of consultation with partners. That’s also changing.

The idea that a payer would be comfortable squeezing a vendor just isn’t broadly true anymore, there is a collaborative approach to business relationships in an unsettled, fast-moving marketplace. The extra effort it takes to make a supplier happy and forge a way to pay them securely as they prefer strengthens what might be a critical relationship in an age of significant supply chain challenges. The innovations you see in networks like Paymode-X, which brings vendors and payers closer together and allows for more intelligent routing of payments, also makes it simpler to focus on providing value on both ends of the experience. That’s ultimately a good thing.

Adopt what makes consumer payments successful

Objectively, B2B innovation has lagged behind consumer payments innovation. You’ll get different figures depending on where you look, but a recent PYMNTS.com survey found that 71% of consumer payments are made electronically and only 58% of B2B payments are. That gap is narrowing, but not quickly enough.

Think about why you use consumer solutions like Venmo or Zelle to pay friends and family members. It’s exceedingly simple, they are secure, and the interfaces are easy to use. There’s a flexibility that comes with having a solution that easily bridges gaps (don’t have Venmo? Just go download it!) and is much easier than writing out and sending a check, and that’s where B2B Payments are heading. It’s a cliché but it is the consumerization of business payments.

Even as innovation has ramped up, which we’ve seen both at Bottomline and across the market, adoption has been slow. The global challenges that have arisen in the past year thanks to COVID-19 have made it clear that in the B2B space, which is twice as large as the B2C and C2C spaces combined, it’s the right time to push to do what consumer payments already do well. It’s also the right time to evangelize the value of solutions to finance teams who badly need that transformation.

Involve AI and ERPs

Lean has been, alongside terms like Big Data and Pivot, one of the buzzwords of the 21st century so far, and that’s been synonymous with smaller, more agile teams. It goes far beyond personnel, though, in terms of leaner, more intelligent processes that make life easier for everyone.

What we hear over and over again from customers and prospective clients alike is that there’s extreme manual task and portal fatigue. Accounts payable teams and their accounts receivable counterparts are weary to the bone with having to stuff check into envelopes, haggle with one another over the best payment methods, and key in remittance detail. They’re equally tired of having to log in to 10 different portals to manage slices of their payment mix, a challenge that candidly none of us have entirely solved yet.

Businesses are not yet leaning on banks and fintech solution providers with all their weight to give them something that works out of their native ERP. They’re definitely not pushing to create a seamless way to automate invoice processing, figure out the best way to pay the car manufacturer versus pay the tire company without a lot of manual and communication-heavy work. Automatically reconciling the mounds of payment data coming back in with payments is not even on the radar.

However, it won’t be long until they do start asking for those things because of the potential for greatly streamlining operations and creating a leaner finance team. The market is spinning up artificial intelligence, machine learning, and tight ERP integrations because we’ve all heard the phrase “data is the new oil” and companies will want to at minimum own their own data and potentially monetize it.

The truth is that few businesses can claim to have the kind of flexible, efficient end-to-end process we’re all striving toward. With the pace of innovation colliding with the depth of the need, though, it’s only a matter of time until every business demands it. It’s on the constellation of B2B payments providers to deliver.


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Tom Dolan

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Tom Dolan

Tom Dolan is the General Manager of Paymode-X, a role that allows him to connect product, operations, and sales to deliver solutions that help businesses pay and get paid. With over 15 years of experience in the cybersecurity industry, security and efficiency are his top priorities.
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