The new coronavirus swiftly impacted small- and mid-sized businesses (SMBs) rather harshly, with these entities now struggling to manage remote workers who need to send out paper invoices to suppliers and other business partners attached to checks. Moving from paper to digital has evolved for business-to-consumer (B2C) payments in recent years, but upgrading business-to-business (B2B) payments has taken longer. COVID-19 is pressuring businesses that may be running out of time, however.
There are more tools available than ever to help SMBs move their accounts payable (AP) and accounts receivable (AR) processes forward to become more efficient. These companies could make use of check scanning technologies or digital invoicing products to ease both costs and payment frictions, improving the time it takes for these payments to be finalized. Challenges to implementing these technologies still persist for some, however, as they must balance their budgets with what their clients and customers expect.
In the latest Digitizing B2B Payments Tracker®: Moving From Paper Checks To Digital Payments Choice, PYMNTS looks at the latest changes in the B2B payments space, including how businesses are responding to new supply chain payment challenges emerging from COVID-19. The Tracker also examines how newer technologies can be paired with more traditional methods in this space to make payments more efficient both for retailers and for suppliers.
Around The B2B Payments World
Many SMBs have turned their attention to surviving the impact of COVID-19. Smaller businesses have been disproportionately affected by the virus as it keeps physical locations closed, and the longer the pandemic continues, the more concerned these businesses have become. Ninety-six percent of SMBs in the United States already saw negative financial effects one month into these shutdowns, according to one recent study. This can cause strain especially for SMBs that are still using paper-based AR and AP processes, something that is made even more difficult as they adjust to workforces that are mostly remote.
Companies like digital invoicing firm Invoiced are responding to SMBs’ COVID-19 struggles. The company is offering U.S.-based nonprofit organizations the ability to access its Basic plan for free for up to six months, a product set that includes integrations with messaging solutions like Slack and accounting company QuickBooks as well as access to its billing portal. The features offered in the product will allow businesses to keep track of all of their invoices on one digital dashboard, with the aim of alleviating some of the problems with approving invoices that have been caused by remote workforces.
Businesses are also beginning to look for more flexibility out of their AR and AP processes, by searching for innovations that can add more options to this experience like they are used to from consumer transactions. Twenty percent of B2B buyers, or those who make purchases and manage supplies for their companies, view this lack of payment alternative as a serious issue, according to another study. Allowing for multiple payment options is a little more difficult to do for B2B transactions than it is for B2C purchases, however, as the former requires more security and comes attached with more data.
For more on these and other stories, visit the Tracker’s News And Trends.
Why Macadoodles Still Relies On Paper Checks For Supply Chain Simplicity
Convenience-hungry consumers may be more concerned about speed over security when they make payments, but for businesses looking to pay their suppliers, it is the other way around. B2B payments come with more security and more data than typical consumer transactions, and businesses thus want payment tools that can help them keep careful track of their cash flow and inventory. Digital payments are not always the tools that will fulfill these needs for businesses, who may still find that legacy methods such as paper checks are more suitable. Paper checks still represent trust and simplicity to many firms, in fact, says Ernie Olsen, vice president of growth and engagement at liquor retailer Macadoodles in a recent interview with PYMNTS. To learn more about how Macadoodles is keeping its supply chain simple, visit the Tracker’s Feature Story.
Giving Paper Checks And Invoices A Digital Overhaul
Many businesses still rely heavily on paper to finalize their payments, including paper-based invoices with lengthy approval processes. Sixty-three percent of today’s B2B invoices need signatures from at least two employees before they can be sent out, for example. This makes these processes time-consuming at the best of times, and challenging during these times when employees must work remotely. Firms have been searching for ways they can make this part of their B2B payments process less paper-reliant and more budget-friendly, but these new digital systems need to work with the traditional payment methods they still wish to keep. To learn more about how businesses are seeking to innovate their B2B payment processes, visit the Tracker’s Deep Dive.
About The Tracker
The PYMNTS Digitizing B2B Payments Tracker®: Moving From Paper Checks To Digital Payments Choice, a partnership with Deluxe, examines the latest B2B payments trends and events as well as how businesses are using technologies both new and old to keep up with changing client and consumer needs