Billing and payments are processes that touch the financial lives of every consumer and business. With FinTech innovation yielding more choices than ever for both billers and payers, cost often emerges as the key driver behind what solutions users adopt — both in the business-to-consumer (B2C) and business-to-business (B2B) context.
However, there's more to the story of optimizing billing and payments than choosing the cheapest service, as Fiserv SVP of Biller and Output Solutions Steve Brown told PYMNTS in a recent B2B Payments Executive Forum Series Masterclass video discussion. Collaboration and digitization, he explained, are two key ingredients to enabling both ends of a transaction to obtain the greatest value from a process or new technology, particularly as users' expectations continue to heighten.
“Billing and payments is a very dynamic segment of our world, and of the business,” he said. “It touches every single person and every single business. Moving cash and moving information is probably one of the most important, trusted activities that all of us expect to go well, to be effortless, and be trusted.”
That aspect of not only moving money, but moving data along with a transaction, is critical to understanding how to maximize the value of any billing and payment process. Brown said this is particularly true in the B2B payments space, in which both payers and recipients expect a transaction to occur seamlessly, and almost invisibly. Communication is at the core of the ability to integrate transactional data, he noted, which in turn allows for seamless integration into back-office systems, and between business partners.
Rethinking Business Models
Of course, enabling such seamless data integration is no easy feat, particularly in a world where — for both businesses and consumers — payment choices are on the rise.
“The average consumer is using four different payment channels,” explained Brown, adding that corporations today are now tasked with providing choice for their paying customers while still maintaining profitability.
There are ways to guide payers to optimal — i.e., affordable, more efficient, faster and more valuable — payment methods. Brown pointed to the credit card transaction, for example, which can be quite expensive to process. If an organization is instead able to provide a text message for a customer, notifying them of an upcoming payment and including a link to pay via ACH, the business can encourage a more affordable and efficient payment method that supports the movement of information along with funds. In turn, the customer experiences a seamless process of getting notified that it's time to pay, and a platform to make that payment, in a unified way.
In the procure-to-pay space, added complexity stems from the many layers of the process: To make a purchase, it must be approved, and the procurement department must generate a purchase order (PO). That PO must be sent to a vendor, which must then process that document and send back an invoice. The procurement and accounts payable departments on the buyer side must process that document and approve it for payment.
It's the back-and-forth of transmitting documents for transaction approval that adds a significant layer of friction, often preventing optimization of the B2B payment itself, and highlighting the importance of moving information with money.
Collaborating To Improve Cash Flow
Whether operating in B2C or B2B spaces, corporations can struggle to provide their customers with payment choices that include integrated payment optimization and support for transmission of information. However, achieving these goals via digitization has a major impact on cash flow, according to Brown.
“One of the greatest things about driving digitization is helping to lower costs and increase cash flow,” he said.
It's all about lowering the days sales outstanding (DSO), which can only be done when data moves quickly and seamlessly. Brown highlighted the friction associated with sending paper bills through the mail, which often results in paper checks being sent back through the post, too. In these scenarios, cash is tied up in the postal system, he explained, inevitably expanding the number of days that pass after a sale is made before payment occurs.
Collaboration is key to being able to achieve goals like digitization, integrated data and payments optimization, whether that be through partnering with a company like Fiserv or with one of Fiserv's own partners. Partnerships can “fill the gaps” experienced in the intricacies of the billing and payments process, he said, and are essential to addressing the demands of both sides of a transaction.
That advice isn't only for businesses and consumers in the thick of the billing and payments experience, though. According to Brown, the financial services industry must embrace a collaborative spirit as well, because such complex goals leave plenty of space for innovation.
“I think the market in the industry has a tremendous amount of opportunity for improvement,” he said, “and for the folks who are inspired and creative, and driven to be a part of that, there is a lot of opportunity in the space.”