Why Banks Aren’t Better at B2B Payments

What really surprises Karla Friede, CEO and Co-Founder of NVoicePay about B2B payments isn’t how long it has taken for new things to get traction or even how difficult it is to get companies to change their process. It’s the state of solutions in the market and how poorly banks are at handling electronic payments. Friede explains why she believes that to be case, and what the key criteria should be in choosing a digital B2B payments solution that delivers what customers want and does it in real time.

We talked earlier about the move from paper-based to electronic-based payables. You mentioned that the first step is to find a solution that solves the problem, meaning sending all payment types through a single workflow. What should organizations be asking themselves before making the shift to e-payments?

KF: I think there’s a really important first question and first step. When you’re thinking about moving to e-payments and evaluating solutions that you might see out there primarily from your bank, a really critical question is to ask how the vendor or supplier information is handled. Is it continuously updated, does the solution provider deliver that for you, and more importantly, do they do so in real time? So when you make a payment, you are making a payment with the most current information possible. This is really key.

If that solution provider expects the customer to go out and collect that information from people they do business with, and also expects them to figure out and maintain that information, that could be a huge red flag. Customers need to keep looking for a solution provider that does that work for them. It doesn’t have to be the customer’s responsibility anymore.

Moving hundreds, even thousands, of vendors to a new payment method is one of the reasons why companies are reluctant to switch. How much heavy lifting is really involved, and who’s responsible for the vendor enablement process?

KF: Well I think that’s the point, and that is, it shouldn’t be the customer’s responsibility to do a campaign to enable the vendors for payment. It should be the solution providers’ job to go out and make sure that customer’s suppliers are enabled for payment and that information is up to date. That shouldn’t be the customer’s responsibility, and if it is, that’s a sign that the solution is wrong, or that businesses won’t get to where they want to be because it’s impossible to maintain that information over time.

The solution provider should also be talking to customers about payment priorities and gathering information, but it shouldn’t take more than 10 hours of a company’s time to get up and running on an e-payment solution.

We’ve passed the mid-year mark. Have you seen anything so far this year in corporate payments that’s surprised you?

KF: Yes, I’ve been very surprised at the state of solutions out there, and how poorly banks do at trying to handle electronic payments. They seem big, and they’re right there, but their ability to deliver on technology and service has never been good. The idea that they can deliver this solution has led to inefficiencies that are out there in the market – in other words, customers who think they are doing electronic payments through their bank may be sending 25 percent of their total payment volumes through the bank.

Because the banks didn’t step up to that ongoing vendor enablement, that’s all they’re going to get. Now, the customers have a situation where they’re not only still writing checks, but they’re also maintaining multiple processes to make payments. I think this is more inefficient than if they had just stayed with paper checks. I think that’s totally unacceptable.

Looking at your crystal ball, what do you believe is in store next year with regards to B2B electronic payments?

KF: I think the time has come. Once the market really understands that the simplicity and the efficiency of consumer payments is finally in the B2B world, and that in that space, they have a user experience with control and visibility of those payments, I believe the market will start moving. It’s a huge market and is in a state where people are looking to understand electronic payments, but I think that 2015 and early 2016 will be the timeline when the market really starts to move.

Karla Friede
CEO & Co-Founder, NVoicePay

Karla Friede is Chief Executive Officer, co-founder, and member of the Board of Directors at NVoicePay. Friede has 20 years of experience in management, finance, and marketing roles in both large and early stage companies. Along with the founding team, she has grown NVoicePay into a leading B2B ePayment Solutions firm. Prior to founding NVoicePay, Friede was President and CEO of privately held Zevez Corporation; VP of Marketing for GeoTrust (acquired by Verisign in 2006); Co-founder of The Ascent Group, a strategy consulting firm serving technology firms in the bay area; Director of Marketing at Mentor Graphics, and part of the PBAS team at KPMG.

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