B2B Payments

AP Automation: The Three ‘P’s’ Of Standing Out In The Crowd

Corporates Explore Path To AP Automation

With B2B payments being an increasingly attractive target for innovators, the landscape is growing crowded as more banks and FinTechs roll out their accounts payable (AP) automation solutions.

The competition is undoubtedly heating up. According to Comdata’s Senior Vice President of Product Tad Fordyce, there are several key areas where financial institutions (FIs) can focus to drive the most value for their corporate clients. At the same time, he explained to PYMNTS, industry collaboration can mean combining banks' and FinTechs' biggest strengths.

It can be a tricky landscape to navigate, however, as more industry players step in.


"I think everybody recognizes that B2B payments are an enormous opportunity in the U.S. and globally," said Fordyce, adding that the pandemic has created even more opportunity for innovators to flex their AP automation muscles. Coronavirus-triggered business disruption is "a prime example of an opportunity for us to take a different approach when we work with all of the constituents and highlight some of the advantages of payables that can be initiated from anywhere."

The Three Ps Of Differentiation

Differentiation is key to remaining competitive in a highly competitive space. According to Fordyce, when it comes to B2B payments technology and AP automation, targeting the unique needs of particular verticals is one impactful way to stand out.

Breaking it down, he pointed to the "three Ps" of differentiation: price, process and pain points.

Offering competitive pricing is critical in today's market, as businesses' budgets are growing tighter. This can come in several forms, but what's important, said Fordyce, is to optimize the costs and fees associated with cards, checks, ACH and other rails for all parties involved — not just the payer.

The second P, process, is all about how B2B payment workflows actually move in, through and out of an organization. Whether end users want transactions to integrate through their enterprise resource planning (ERP) systems, AP departments, point-of-sale (POS) solutions or eCommerce platforms, solution providers must remain flexible and seamless.

Finally, addressing the unique pain points of each client is paramount to customer success. Again, noted Fordyce, this can take many forms — from automating invoice reconciliation to addressing a user's resource constraints.

"You may have a wonderful solution, but it requires the client or the vendor to do something," he said. "With those constraints, particularly in times like these, your ability to be flexible may give you another opportunity to differentiate.”

Combining Strengths

Competitive differentiation is also about focusing on a player's unique strengths.

"Banks have the advantage of holding deposits and offering lines of credit and flexible payment terms to their clients," noted Fordyce. "That's very attractive to a vendor or payer, depending on what their cash flow needs might be."

FinTechs, on the other hand, have the advantage of agile and nimble technology, enabling them to achieve highly targeted solutions for both accounts payable and accounts receivable (AR) teams.

As Fordyce highlighted, perhaps the most valuable strategy for banks or FinTechs in the blossoming B2B payments arena is to collaborate with each other.

"To combine those two might be the best way to go," he said. "You get the best of what traditional banks can offer, combined with the flexible technology solutions that FinTechs offer."

The pandemic has inflated corporations’ pain points, making it more vital than ever for solution providers to collaborate and bring the most effective products to market.

That's not always easy in a period of market volatility, however. Whether it's a bank or a FinTech (or both) providing the solution, service providers must ensure that the value proposition can drive adoption for both corporate buyer and vendor.

Banks are tightening up their credit and lending operations as a result of the pandemic, but they're also seeking ways to broaden revenue lines through products like card payments. Banks often have the advantage of more robust security and anti-fraud measures, which can benefit FinTechs through partnerships. And while banks often struggle more with customer service than do their more agile FinTech peers, Fordyce said partnerships can help traditional FIs improve the customer experience.

"Customer service is probably going to be one of the biggest differentiators," he said. "Listening to their customers' needs, being receptive to change, offering alternative solutions and communicating will allow them to differentiate themselves."

The B2B payments landscape is changing, and that evolution has been accelerated by COVID-19. The stakes are higher for solution providers to address the multitude of friction points their corporate customers face. Whether it's through competitive differentiation or industry collaboration, both banks and FinTechs have their work cut out for them to improve the B2B payments experience.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.