While the B2B procure-to-pay arena has continued its pursuit of a consumer-like experience in product sourcing, online purchasing and payments, B2B payments have a long way to go before they mirror anything like the ease and speed of peer-to-peer (P2P) payments.
Apps like Zelle and Venmo have introduced heightened consumer expectations to be able to connect with their peers and send and receive funds within seconds. But the added operational burdens associated with accounts payable (AP) largely make this level of speed and efficiency impossible for businesses, particularly small and medium-sized enterprises that lack resources to automate their systems.
According to Pierre Dutaret, CEO and co-founder of France-based accounts payable FinTech Libeo, technology is vital to enabling small and medium-sized businesses (SMBs) to elevate their AP strategies. Yet just as important, he told PYMNTS in a recent interview, is focusing on establishing connections, not only between back-office systems, but between buyers and suppliers, to achieve a P2P-like experience.
Connecting The Back Office
Dutaret highlighted the frustrations that many SMBs face when managing payments in a professional setting in a world in which consumer payments have become so efficient.
"Today, you can pay a friend in a second for free by using a mobile payment app," he said. "For businesses, it takes 10 minute and costs an average of 22 euros."
The lack of automated technologies at SMBs' disposal, he added, creates a "waste of time, human errors, and an erratic version of finances."
Historically, small businesses spend too much time manually keying in invoice and payments data to pay invoices and record those financial transactions, leaving professionals to toggle from their online banking portals, accounting platforms, email inboxes, ERP systems and more — often entering in the same information again and again.
Just as P2P payment apps have been able to bolster the user experience by looping directly into users' bank accounts, Dutaret said Libeo aimed to bring SMBs this efficiency by creating a "hybrid layer" technology that sits on top of existing bank accounts and back office systems, enabling its AP automation tool to integrate via APIs with ERP and accounting platforms, while also supporting integrated SEPA payments direct from bank accounts.
The company's technology recently caught the attention of investors: earlier this month Libeo announced a $4.32 million funding round led by U.K.-based LocalGlobe, as well as Breega and angel investors.
Connecting Buyers And Suppliers
Bank connectivity is important to addressing the workflow silos of traditional procure-to-pay processes, but optimized accounts payable processes cannot be achieved without SMBs and their technology providers also addressing friction on the supplier side.
According to Dutaret, ensuring connectivity not only with buyers' bank accounts, but with suppliers' as well, enables vendors to receive funds where they want to receive them. By addressing operational inefficiencies on the AP side, small business buyers are better able to support the cash flow needs of their vendor base, too.
"In Europe, one-quarter of bankruptcies are caused by payment delays," he said, also pointing to the lack of information vendors need to process payments, like bank reference numbers, as another key area of friction B2B suppliers face.
Enabling B2B payment efficiencies means enhancing the connection between buyer and supplier. While accounts payable may never fully evolve into a process that exactly mirrors that of a P2P payments mobile app, by ensuring integration of payments and data in buyers' back offices, and by promoting connectivity between buyers and suppliers, B2B financial transactions can better achieve the same efficiencies that digital P2P transactions do.
"It's all about communication, [and ] having the right, secured data," said Dutaret. "Good relationships between client and supplier are good for business."