Commercial organizations of all sizes are under continued pressure to improve efficiency and effectiveness. Although Accounts Payable (A/P) and Accounts Receivable (A/R) functions are not the core business of most firms, they are critical to managing the cash flows that are the lifeblood of all businesses. Especially for business-to-business (B2B) payments, which represent the majority of commercial expenditures.
B2B payments are evolving at a rapid pace as technology and commercial realities place an ever-greater emphasis on efficiency, speed, and effectiveness.
Payments trends for B2B companies:
1. Evolution toward comprehensive digital payment and reporting solutions, often integrated with financial systems for additional automation benefits. Starting with the procurement requisition through to payment settlement, purchases are increasingly tracked and managed electronically through an appropriate system (or combination of several).
2. Increased adoption of digital solutions focused on utilizing working capital benefits such as single-use accounts, virtual accounts, and payment platforms, proving suitable for a broader range of addressable spend.
3. Businesses and service providers are increasingly partnering with fintech to enhance the reporting, reconciliation, and automation of various parts of their procure-to-pay processes.
4. Most organizations have or are moving towards, automating their procure-to-pay processes. Adoption of automated B2B payment regimes can be a catalyst for organizations to streamline and simplify their operating environment significantly. Also, with real-time analytics enabled, improving management insight into the underlying operations of the business and allowing continuous improvement of processes and controls is a reality.
5. A/P and A/R functions are shifting from administration to a more strategic focus on providing financial insight, working capital optimization, and, with hedging of foreign currencies, opportunities to management FX risk.
In depth - benefits of electronic payment methods
Organizations are gradually driving towards electronic means of payment as well as experimenting with different tools and providers to add value through capabilities such as data analysis and cash flow visibility.
Electronic payment methods are
consistently evaluated as being
better, faster and cheaper than
Electronic payment methods are consistently evaluated as being better, faster and cheaper than alternative mechanisms. This is driven by business process benefits (e.g. improved cash flow, less administration, robust controls), speed improvements (due to digitization or reduced approval steps) and cost savings (such as lower transaction or total process costs).
Integrated purchasing platforms can improve elements of the entire procure-to-pay process. This can include the electronic creation, management, and delivery of invoices, as well as the automation of reconciliation, refunds, policy enforcement, monitoring, and biller aggregation.
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Partnering with such providers is an increasingly common way to enhance core payment and financial capabilities and embed digital payments as part of the business workflows to improve efficiency, business intelligence, innovation, and decision-making.
The challenge for financial managers and account operations teams is to reduce the cost of procurement without compromising controls and visibility. Compared to traditional payment mechanisms, a digital payment solution can lower processing costs as well as improve compliance, controls, overheads and administrative costs.
Less tangible, but in some cases, even more important, are the improved relationships that could develop through better processes integration between the buyer and seller. Digitizing payment processes can provide benefits to both suppliers and buyers, but requires both sides to work together to be realized.
Learn more about payments solutions that can make invoice tracking and reporting more efficient here or schedule a chat with one of our payments specialist at this link.