From sourcing to invoicing, B2B transactions involve a lot of steps before the actual payment. Corcentric is one company that focuses on streamlining those business processes, but today, the company is announcing partnerships that integrate support of ePayments into its systems.
Using FIS-run PayNetExchange to process ACH, checks and virtual cards and using Comdata to issue Mastercard commercial cards, Corcentric pulls in payment capabilities across a range of rails to support the last mile of the B2B transaction.
Matt Clark, COO at Corcentric, offered PYMNTS some insight into the challenge of supporting the demands of both buyer and supplier, a feat that can include disparities over which payment rail either side prefers. In the context of the rollout of Same Day ACH, as well as new research that found companies have actually increased their use of the paper check in the last three years, the payment rail choice isn’t always easy.
“I think what ends up happening is it’s really the suppliers that dictate where the payment trends go,” Clark said, adding that, with this in mind, any B2B payments solution needs to be “holistic” and support multiple payment options.
It’s unlikely that one payment technology will become so popular that it drives others into irrelevancy, he said.
The data makes that glaringly clear. On the eve of the Same Day ACH rollout, the Association of Financial Professionals (AFP) published its 2016 Electronic Payments Survey, released every three years to examine corporate payment trends. In a reversal of past reports, 2016’s results found that corporate use of the paper check actually rose and has now returned as the most common form of payment, used by 51 percent of survey respondents.
It’s surprising, considering the numerous advances in electronic B2B payments technology, including ACH and virtual commercial cards.
“I think some of the mistakes people have made in the past are, for example, people were focused on implementing a card program, and that’s all they really focused on,” Clark said, explaining how corporate buyers have approached their payments strategy. “They went out to their supply base and said that all of these suppliers now have to accept credit card. But it turns out only 15 percent of their total spend could be on the card.”
Suppliers need to get on board with buyers’ payment strategies; otherwise, companies are left with that 85 percent of spend to fall on another payment rail — despite having invested resources into developing a commercial card payment program.
But there’s more to choosing a payment technology than supplier acceptance. Speed, for instance, is a strategic factor.
“Suppliers want to be paid faster, as quick as possible,” Clark noted, “and customers want to pay efficiently, on longer terms. There’s a lot of friction between suppliers and customers.”
It’s unlikely that Same Day ACH would be used for a same-day B2B payment in full, but Clark said that technology, and third-party payment providers, can help find the middle ground between buyer and supplier, enabling suppliers to get paid more quickly, while offering buyers time to manage cash or an early payment discount.
Today’s market, Clark said, makes B2B payment terms even more critical for each side when it comes to cash flow management.
“It almost becomes a new form of lending, where, as it becomes harder for businesses to get credit lines with banks or short-term loans to purchase inventory or make payroll, they need to find another source of cash — and find it fast,” the executive said.
For a supplier, that can mean getting paid faster. For a buyer, that can mean early payment discounts or strategic payment terms. Finding common ground between the two, of course, is key.
And Clark also pointed to the ability for electronic payment technologies to boost corporate cash management by adding visibility into their cash positions. Data as simple as corporations knowing that their payment has landed at a supplier, and suppliers knowing a payment is headed their way, means far greater control of finances than can be obtained without digitization.
Clark noted that this data is possible even with paper checks, though using the technology available to gain that visibility isn’t always used.
“Sometimes, customers, especially in the mid-market space, are either not aware of the best practices or just don’t have the resources to administer best practices,” he said, pointing to the Positive Pay tool to combat check fraud and to NACHA’s standards to secure ACH payments.
“It’s really all about taking each of the individual forms of payment, whether it be check, ACH or card payment, and doing it in a way that provides maximum visibility,” Clark added. “It’s key when it comes to the payment process.”
The electronic payment options for corporations are growing in sophistication, giving companies the chance to grasp cash flow control at unprecedented levels. But with the unexpected rise in paper check use for B2B payments, it’s clear digital support of paper checks may be the way to boost visibility and security for both buyer and supplier today.