B2B Payments

A Survival Guide To The Fragmented Procure-To-Pay Market

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The B2B payments services and technology sector is both shrinking and expanding. How? As more innovators and disruptors roll out their tools, companies are collaborating and consolidating in hopes of achieving streamlined, end-to-end solutions that meet the needs of both buyer and supplier.

This type of teamwork enters the industry as questions begin to emerge about the sustainability of certain business models. Experts are casting doubt on whether the industry is oversaturated as corporate buyers resist having to link their bank accounts to dozens of different payment networks and suppliers resist coordinating their AR operations into multiple eProcurement and payment services preferred by their buyers.

How can procure-to-pay solutions come out the other side of this bog of competition and consolidation? Two industry players weighed in, telling PYMNTS that it’s all about pushing for adoption of their tool and convincing both buyers and suppliers that the value proposition is too high to pass up.

End-To-End

When Taulia and BuyerQuest announced their partnership last month, it was a move to join two ends of the procure-to-pay process: BuyerQuest provides an eProcurement platform for corporate buyers, which then send purchase orders and receive invoices via the Taulia supplier interface.

In an interview with PYMNTS, BuyerQuest CEO Jack Mulloy and Taulia VP Partner solutions Matt Wright explained just how difficult it can be to meet demands of both buyers and suppliers.

“There’s no one-size-fits-all,” Mulloy said. “From a procure-to-pay perspective, you need to present options and be flexible, to integrate well with legacy systems and, ultimately, impact the bottom line through the adoption of the application.”

Both executives pointed to achieving the highest possible level of user adoption for success — an easy enough concept but one that they said requires a complex strategic effort.

Taulia and BuyerQuest joined up to “define a new way to drive value to organizations,” Wright said, “and that’s primarily through eliminating and driving down barriers to adoption.”

“What’s important is making the tool available, easy to use, so adoption is a natural event,” he continued. “It if takes a big effort, then the results will just be mediocre.”

Value Propositions 

Independently, eProcurement companies need to think of procurement officials, and supplier financing firms need to think of suppliers — each group of their prospective client bases.

But both Mulloy and Wright spoke of the importance for these service providers to think of the other side of the equation.

For instance, Mulloy noted that, while BuyerQuest aims to provide a consumer-like eCommerce buying experience for corporate procurers, he is also looking at the suppliers. Making sure buyers get the best deal possible is about getting suppliers on board to that service.

“If we think about driving value through dynamic discounting, it’s relying on getting suppliers to participate and make it crystal clear what the benefit is to the supplier,” Mulloy explained.

“Supplier enablement is the lifeblood of a successful procure-to-pay initiative,” the executive continued. “It takes a coordinated effort, good communication, good solutions that the suppliers feel comfortable embracing.”

Just as suppliers are crucial to a successful procurement offering for buyers, Taulia’s Wright said that corporate buyers are also critical to a successful supplier financing and invoicing service.

Getting buyers onboarded to an eProcurement solution, for example, is always important for suppliers.

“For purchases originated within the procurement solution, the likelihood of those invoices being approved more quickly is much higher because they’re complying with spend rules,” Wright said. “Anytime an invoice gets approved more quickly, it’s opening up the opportunity for a supplier to be paid early.”

Supplier Payments

While the Taulia-BuyerQuest alliance aims to serve both buyers and suppliers, Wright and Mulloy spoke to the role of getting suppliers onboarded to a solution as critical, even if those suppliers aren’t generating any revenue for a service provider.

“Although suppliers generate no revenue to us, they’re our most important customer,” Wright stated. “If we’re not going to have suppliers using our tool, then the value proposition just falls apart. It’s fundamental.”

Providing a service to suppliers for free, he added, is a major part of achieving that adoption the executives spoke of earlier. If a service provider can meet the demands of both buyers and suppliers without charging suppliers, it’s “all the better,” said Mulloy.

“There will be enough challenges with supplier enablement without introducing a fee model,” he added.

As the procure-to-pay space encounters greater technological sophistication and a broadening of service providers, not all players will agree with this strategy. Some may argue that, as corporate buyers generally have more power over their suppliers, procure-to-pay tools must meet buyer needs first and foremost, and supplier adoption will follow.

But Mulloy and Wright pointed to their own experiences in their careers that helped shape their viewpoints.

“Both of us came from bigger, slow-to-move types of organizations,” Wright said, “with revenue models that were not really supplier-friendly. Along with that comes really big barriers to adoption.”

So, while providing a simple, streamlined way for corporate buyers to search for, purchase, order and pay for goods and services, making it as easy as possible for suppliers to participate in this process is the key to user adoption of a procure-to-pay solution, the executives said.

“If we can drive better catalog-based, contract-based purchase orders, then invoices will flow through more seamlessly, and in turn, we’ll be able to shrink the time in which an invoice comes in and is approved and ready for payment,” said Mulloy. “That’s one of the biggest challenges, from a procure-to-pay perspective, that I’ve seen over the last 15 years — the latencies are a lot larger than you might think within these large organizations.”

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 edition of the FI Innovation Readiness Playbook examines how the innovation playing field is leveling as small FIs implement bolder strategies and larger banks adopt more measured approaches.

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