It’s time to come clean: the B2B payments process is broken. As companies like Apple through Apple Pay move to make B2C payments easier and more secure by transforming phones into payment portals, B2B, for the most part, remains mired in the past.
From shopping to socialising, nearly every aspect of our lives has been digitised, mobilised and automated. Yet, when it comes to the world of business, antiquated methods of payment are still the norm. More than 60 per cent of payments between businesses in the US are still made using cheques.
For buyers, that means lots of paper and inefficiencies that cost their companies billions each year. For sellers, it means little visibility into when they will actually be paid, and what they are being paid for, making it difficult to effectively manage cash and reconcile payments. It’s a vexing problem on both sides of the equation.
But the move is on to solve it. By automating the billing and settlement process and digitising the “pay” in procure-to-pay, procurement organisations can effectively change the game.
The cheque is in the mail. It’s a classic joke. But few companies find it funny. Buyers are drowning in paper. And sellers have no idea when – or how much – they will be paid. But technology is fast emerging to address these challenges.
By leveraging the connectivity and insights of business networks and the convenience and agility of cloud-based technologies, for instance, innovative companies can connect and collaborate around B2B payments in completely new ways and more effectively manage the entire payment cycle – from exchanging purchase orders and invoices to delivering rich remittance data along with payments that shows what they represent at the invoice and line-item level - all in a fast, secure, electronic environment.
Emerging payment technologies are certainly disruptive. But disruption fuels innovation. And innovation drives advantage. Companies who ditch their manual ways in favour of automated solutions will see less paper. They will suffer less risk and put less effort into managing bank account information and related data. They will uncover and resolve disputes faster, monitor ongoing payments better and lower their processing costs and fraud risk. And transform their business in the process.
Change isn’t easy. But in today’s hyperconnected, global economy where financial and supply risk are greater than ever, it isn’t an option. It’s a requirement for survival…
☛ Drew Hofler is manage cash solutions marketing director at Ariba.