Categories: B2B Payments

How AP-AR Connectivity Drives Buyer-Supplier Collaboration

The barriers that have historically separated accounts payable (AP) from accounts receivable (AR) continue to fall.

Driven by data integration, this trend is enabling cash to flow more seamlessly between buyers and suppliers and to allow business partners to be on the same page about the current status of invoices and payments, while enabling transaction data to land automatically in back-office platforms.

B2B players are gradually recognizing the hard-dollar value of the AP-AR connection, but as this industry evolution progresses, service providers and their corporate clients are also embracing another trend at a higher level: the opportunity for deeper collaborative relationships between buyers and suppliers.

“Buyers are looking at suppliers more as partners, rather than just vendors,” explained SourceDay Founder and CEO Tom Kieley in a recent interview with PYMNTS.

SourceDay recently announced the launch of request for quote (RFQ) and AP collaboration capabilities to its suite of procure-to-pay services, a feature that enables corporates to automatically ingest a supplier invoice and ready the company for payment. While the technology can connect buyers to early payment discounts and ease the pain point of invoice exception management, Kieley also pointed to the value-add of deeper buyer-supplier ties as that relationship becomes more strategic.

Connecting Buyers and Suppliers Through FinTech

Another service provider, Assured Asset Management, also recently announced a new accounts payable solution designed to foster connectivity between buyers and suppliers.

In a press release, Hong Kong-based Assured announced the rollout of its Traceable Accounts Payable (TAP) solution. The tool, developed on blockchain, is connected directly into suppliers’ accounts receivable and contract payables by recording the transfer of goods and services. That record can unlock liquidity for small and medium-sized businesses, connecting them with supply chain finance before a buyer pays an invoice.

TAP reflects the financing opportunity in connecting accounts payable and accounts receivable, which can support enhanced transparency, mitigated risk and deeper buyer-supplier relationships.

In a statement, Assured CEO Robert Cheung said the solution is focused on providing “end-to-end financing within the entire supply chain.”

While the payment and financing of outstanding invoices can certainly enable stronger buyer-supplier relationships, a separate announcement from payment solutions provider Usio focuses on the invoice itself to deepen those ties.

The company said last month that it is partnering with AP automation solution provider Invoice Stream, which will integrate Usio’s PayFac-in-a-Box platform, meaning Invoice Stream will add electronic invoice generation capabilities as well as invoice payment functionality.

“Organizations can now get free, lightning-fast, electronic invoicing capabilities while earning revenue from their outgoing payments,” said Invoice Stream CEO Thomas Perkins in a statement. “Instead of paying legacy P2P solution providers, organizations can now get paid by a solution provider to go electronic, which we believe is truly innovative in the AR/AP world today.”

By tackling invoice friction – in the areas of processing incoming invoices as well as digitizing outgoing invoices – the technology can address friction for a single business that is both buyer and supplier, while easing friction for that company’s own buyers and suppliers, too.

Closing the Connectivity Gap

The recent FinTech evolution is breaking down barriers between buyers and suppliers, and connecting AP to AR could reflect a shift in the B2B arena.

A 2017 report from 3M found that 70 percent of suppliers report that at least half of their corporate customers do not have a system in place to foster buyer-supplier collaboration.

“This coordination gap is potentially costing customers millions in efficiency and development opportunities,” the report stated, pointing to benefits like two-way demand planning and supply chain transparency as valuable characteristics of buyer-supplier collaboration.

While it’s not yet clear just how much that connectivity gap has closed, B2B FinTech’s focus on connecting AP and AR – and on connecting buyers and suppliers – is a step in the right direction.

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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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