Categories: B2B Payments

Accounts Receivable Realigns Its Focus To User Experience

The last decade of B2B FinTech innovation not only led to an explosion of product options for businesses to manage a variety of processes, including accounts receivable (AR), accounts payable (AP) and accounting. It also evolved into a new focus for innovators and developers of these solutions, enabling these tools to operate in harmony with each other, with data integration and sharing of paramount importance to corporate users.

In recent years, especially, AR and AP have begun to converge. AP technologies are introducing new capabilities designed for the AR-side of a transaction, and vice versa.

On the cusp of a new year, and a new decade, this trend will continue, according to Deluxe Treasury President and CEO Barry McCarthy. He spoke with PYMNTS about what’s ahead for the AR landscape as the industry makes even further progress to not only ensure platforms can cooperate with each other, but to ensure corporates have a solid user experience for better B2B payments.

Customer Choice

The AR innovation trajectory has followed the path that many B2B FinTech technologies have begun to follow in recent years — and it will continue to do so in 2020, said McCarthy.

“Scale is required to innovate, but it’s not enough to have a better solution,” he said. “It must be successfully adopted and integrated into a company’s processes, roles, technology and decision to create value.”

As more businesses invest in AR technology, this requirement to integrate into existing back-office operations is crucial. It’s not the only piece of the puzzle to successfully elevating AR processes, however, with the user experience of growing importance to corporates investing in these technologies.

According to McCarthy, the end-users of AR solutions aren’t the only users that technology providers have to keep in mind, either.

“This focus on AR is being driven not only by a desire for efficiency and a strong balance sheet, but also to improve the billing and payment experience for customers,” he said.

In other words, AR innovations have to keep in mind the businesses receiving those invoices and making payments on their AP sides of transactions as well.

The payment experience is a critical aspect of addressing both AR and AP needs, he continued, with businesses not only requiring transparency and convenience, but also choice. Solution providers that can offer this choice in payment “will be a critical differentiator” in the year and years ahead, said McCarthy, adding that AR platforms must allow B2B vendors to offer their payers a range of payment choice beyond ACH or checks, with more firms embracing commercial cards, PayPal and other alternative payment technologies.

Further, that choice must also expand into the area of data.

“With the focus on the payment experience, many firms are seeking to provide the recipient with the payment and the data the way they want it,” he said, pointing to the imperative capability today for data related to B2B transactions to be captured on both ends of a transaction.

Innovation Ahead

McCarthy acknowledged that when it comes to B2B payments, many firms have significantly boosted the efficiency of their “business-as-usual” transactions — the recurring payments they anticipate and expect with known suppliers and customers.

Yet increasingly, one-off transactions — such as one-time insurance payouts, refunds and rebates, are introducing new challenges to both payment and acceptance processes.

“These one-time payments are challenging, resulting in significant friction, frustration and even failure,” he said.

The remittance space has emerged as a particularly active one when it comes to innovation, said McCarthy, with service providers today at a “critical juncture” in which they must decide to “double down or exit.”

Harnessing scale will also become increasingly important for the future of B2B and B2C payments innovation, in the context of remittance payouts and beyond.

But while service providers will have opportunities to tackle friction for both payers and payees, the pace of payments innovation isn’t just tripping up innovators that can struggle to keep pace with ever-evolving end-user demands. For businesses, McCarthy said, this pace of change can also make it more difficult to assess where a company should invest in technology.

That challenge makes it even more imperative that solution providers in AR, AP and beyond are able to demonstrate not only that their technologies add value to end-users, but to end-users’ own customers and users, too. Artificial intelligence (AI) will be an important part of added value in these tools, McCarthy predicted, with the technology able to enhance cash forecasting, AR automation, and other corporate financial processes.

But AI is far from the only technology disrupting payments. As the B2B payments landscape continues to evolve, maintaining a focus on user experience is what will enable service providers to succeed.

“The pace of change is a challenge for banks and businesses alike,” said McCarthy.

This is especially true in payments, where innovation and structural change are accelerating. In this kind of dynamic and uncertain environment, it can be tough for business leaders to prioritize and execute.

“Moving forward,” he said, “solution providers that can solve customer needs and harness scale are going to win disproportionate share in the years ahead.”

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The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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