The Push-And-Pull Of B2B FinServ

In order to meet B2B needs, financial institutions must expand beyond “traditional” plastic credit cards and embrace electronic accounts payable systems, says a white paper from AOC Solutions titled “How Financial Institutions Can Take Commercial Payments to a Higher Level.”

A “card program” used to mean just a physical, tangible piece of plastic, but now institutions must look toward the specific needs of buying organizations and how those clients have specific payment cycle needs.

The paper notes that “most [financial institutions] have already identified EAP as their highest growth and highest revenue opportunity” but that some organizations do not currently have an EAP in place – or perhaps they offer one that does not meet client, or client suppler, needs. Size and resources may matter and some financial entities may not have enough of either to make the most informed, and advantageous, EAP decision.

Nonetheless, says AOC, EAP adoption is pretty much an unavoidable shift – and should accelerate, with growth rates of roughly 26 percent in 2014 jumping to as much as 43 percent in 2016, according to RPMG research data.

The key differentiator with EAP lies with how a supplier is paid subsequent to the submittal and approval of an invoice. Under the terms of the current EAP landscape, there is a “pull option,” wherein suppliers charge a pre-designated charge account, or virtual card.

That virtual card can take the form of a “static” account with numbers and data on file, or, conversely, a card that has a one-time use function. Posy invoice approval, these cards can be “loaded” with designated amounts. But suppliers may in turn encounter issues with the “pull” function, tied to separate transactions or invoices tied to the same project or product.

The other option is the “push” scenario, and in this case the supplier does not charge a card account. Instead, that business will “push” payment to the merchant’s account, with a process similar to an ACH account.

Other payment options expand EAP to include ACH or wire payments.

Stepping aside from the characteristics of payments themselves, AOC’s report states that financial institutions should use technology beyond ubiquitous portals to help facilitate supplier payments, ranging from email to faxes. And of course there is the fee structure to consider, with possibilities spanning one-time implementation fees to fee per EAP transaction.

And beyond the mechanics of EAP, says the white paper, financial institutions must seek to expand education about EAP even as they expand the EAP platform itself. Frequently financial institutions show disconnect between perception of, say, customer service, and reality (for example, there are routine questions from clients and this takes away from strategy and sales growth).

Key advantages to adopting an expanded EAP, says AOC’s research, include additional revenues captured as additional “avenues” of interacting with supplies go beyond the traditional channel. And there is also the benefit of reduced paper costs.