B2B Payments

Ariba: “B2B Payments Is Just Broken”

Since its foundation, Ariba has set out to transform the way companies of all sizes, industries, and geographies buy and sell goods and manage cash by providing e-payment services. To that end, Ariba built the world’s largest B2B network of buyers and sellers and provided, the cloud-based software support for the easy electronic exchange of transactional information.

While Ariba was satisfied with, what they were providing, the company also felt that to really offer a complete package to their clients, they needed to do more. Specifically, they needed to provide a method by which to initiate and settle payments. During a recent conversation, the Financial Solutions Marketing Director for Ariba, Drew Hofler, told PYMNTS VP of Content, Eileen Goode, that this is how the company’s partnership with Discover was born.

(Jump to 1:39) “Our goal is not to be the instrument that actually moves and settles funds as a Discover can or as a bank can. So when we looked at the end of the B2B payments and process, we said ‘B2B payments need, to be fixed,” and a part of that payment process is obviously the settlement of funds. That is why we sought out a partner that also had a vision to change the way B2B payments are done – we wanted to do something new and innovative and that’s where we found Discover.”

Hofler further explained that by working with Discover, AribaPay can deliver an end-to-end solution that transforms the “pay” in “procedure-to-pay,” giving companies and suppliers much greater control over their B2B payments.

The partnership between Discover and Ariba was announced in 2013 and the product will be brought to market in the second quarter of 2014. In addition to signing up customers and continuing developments on the solution based on user feedback, AribaPay has already completed its first set of payments in live production mode with Arlington Computer Products.

Hofler told PYMNTS that Arlington has already seen the benefits of having “a great view of where their payment is at any given time” and knowing exactly where the payment status stands.

Furthermore, Hofler noted that Arlington clients also benefit from knowing where the payment is, what it is for and when the electronic settlement will come through.

(Jump to 6:00) “B2B payment is just broken. Unlike consumer payments where there has been all sorts of innovation over the past number of years, in B2B payments the actual payment of funds happen some 30, 45 or 60 days after the actual delivery of goods or production of the service that is rendered.”

Because of these long time lags in the B2B marketplace, payments are made but suppliers don’t know what they’re being paid for and thus have a hard time reconciling it, especially, if the remittance information is minimal.

Ariba saw this hole and wanted to tie together all the information so buyers can deliver information with their funds and suppliers can see what they’re being paid for or where they’re being underpaid.

(Jump to 7:35)“Ariba is taking the information and delivering it in a value-added way to the payment process”

Hofler emphasized that AribaPay is a true alternative form of payment and that the partnership with Discover is not a credit offering, but instead an attempt to take advantage of the settlement network Discover has.

(Jump to 10:18) “AribaPay is designed an on a net term payment option, where the settlement of funds to the supplier and the debit of funds from their buyer happen on the same day so there is no risk element underneath. As a result, the fee for AribaPay is not even in the same ballpark as the exchange fees that you see on P-Cards and that type of thing.”

Going forward, Ariba’s goal is to allow users to access the information they need and leverage triggers to act on this information as necessary, in order to run their businesses better. Hofler feels that speed of electronic payment, the security that Discover brings and the rich remittance behind it all works together to make the re-consolidation of payments simple.

According to Hofler, the company saying goes “AribaPay makes B2B payments certain, secure and simple”.

To hear more of PYMNTS conversation with Hofler, click here.

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