What Happens When B2B Payments Meets Automation?

B2B payments

B2B payments

The onset of pandemic propelled B2B Payment Automation across many companies

As the pandemic abruptly brought industries to halt, business leaders turned to automation to survive the new normal. While in the financial industry, the traditional institutions had not adopted automation technologies, the pandemic brought a seismic wave of transformation in this rigid sector. Automated activities like Call to action, payments, automatic registration were in swing. While problems like lack of integration between key finance tools, general inaccessibility of forward-looking data and the need for manual processes dotted the finance industry, it was more prevalent in business-to-business (B2B) Payments.

Though automation has been employed for consumer payments, B2B payments were lagging in digital race. This is surprising given that B2B payments have direct impact on cash flow, generates plenty of useful data across customers and supply chains and is more common than B2C payments. While B2B payments remained a huge pain point over decades, today, many FinTech firms are leading the automation trend and alleviating stress of employees within finance and accounting departments across the globe who handle B2B payments daily.

The key problem with B2B payments was need for frequent intervention to rectify and resolve error and update information. According to PYMNTS’ latest Global B2B Payments Playbook, done in collaboration with Worldpay B2B Payments, manual data-entry mistakes occur daily for 7% of B2B companies. This error can affect firms’ profitability, with 74% of manufacturers and 81 percent of distributors saying that these issues can decrease their profitability by up to 25%. Automation in B2B payments, removes unnecessary steps, optimizes efficiency, and provides far-reaching benefits.

Furthermore, though B2B payment automation surely eliminates the paperwork, it also improves the overall productivity by reducing the time needed to process invoices from weeks to hours or even minutes. It also offers security and enhanced accuracy which was hard to expect from the paper based system. The PYMNTS research report also cited that 64% of B2B firms are moving away from physical invoices and adopting automation for profiting from its benefits.

Moreover, it, offers visibility into every payment as it moves through the system, which helps with control over cash flow. A blog posted by American Express, reveals that automating accounts receivable (AR) payments can also make incoming cash flows faster and more efficient and help small-to-midsize enterprises (SMEs) avoid the cash-flow problems that contribute to the failure of so many new businesses.

Another bottleneck in B2B payment was B2B cross-border payments. These payments are paid to or taken in from different countries, so the location where the merchant is registered is different from the country where the customer’s card was issued. The pandemic also acted catalyst for reforming the cross-border B2B payments enabling international businesses seek frictionless solutions with added transparency and efficiency to their order-to-cash (O2C) processes or risk being left behind.