B2B Payments Are No Longer ‘Business as Usual’

In order to adapt to changing economic forces, the B2B payments industry must first address two key obstacles: modernization and digitization.

This, according to Norm Marraccini, SVP group executive of commercial and retail payments at FIS, who said in an interview that every business, regardless of size or vertical, has already had to “rethink” its business model, in general, and how it should operate within its model. Many firms have fought their way through supply chain bottlenecks, materials shortages and staffing headwinds amid the pandemic.

“Now is the most opportune time to continue to change,” Marraccini said. Firms must mull how to make payments faster, pay their employees faster and get goods and inventory delivered faster.

Traditionally, businesses have tried to influence consumer behavior, offering new technological solutions to influence payments and get ahead of consumer behavior. But now, consumer behavior is influencing B2B payments.

And as Marraccini noted, “when you look at some of the shifts in the B2B world, you’re looking at some of the digitization efforts that are coming across all financial industries – reflecting all the different ways that individual customers and businesses want to pay for items.”

A huge swath of employees is working from home and managing accounts receivables and payables from home, he said. At the same time, they are also using mobile devices and tablets to make their own personal transactions as they pay bills, conduct P2P-related transactions or just shop online.

“The consumer influence is pushing the business world to be more consumer-friendly and to reflect how consumers make payments today,” Marraccini told PYMNTS, noting that business owners are consumers, too, who think, “how I handle making a payment as a consumer should not be different from how I handle making a payment as a business.”  P2P payments, he said, can offer a bit of a “goal” for B2B payments – paying an invoice or getting inventory delivered should be just as intuitive and streamlined.

Reducing the Touchpoints 

Organizations are seeking ways to eliminate manual processes from their workflows – especially paper-based interactions. It’s imperative that businesses become more efficient and embrace straight-through processing, where firms can accept payments in real time without having to wait for ACH or wires to settle. The movement toward digitized activities paves the way for greater adoption of virtual cards – especially when used for disbursements done in real time.

Marraccini said of the cards: “They offer the fastest, easiest ways in which to make payments with the least amount of ‘touch.’’’

When looking to eliminate the paper chase embedded in back-office interactions, enterprises can leverage advanced technologies such as artificial intelligence (AI) to make invoice processing and receiving much more efficient – which helps firms’ margins.

In illustrating various use cases of technology in the service of more efficient operations, Marraccini said that companies should be able to upload invoices by pointing and clicking. A wealth of information should be embedded in the invoice to help make payment easier for the recipient.

“As we speed up the process of payments and broaden payment modalities, there must be options for the payee receiving the payment to say, ‘I’d like my payment to come to me faster, and I’m willing to pay X dollars and X cents for it, but it’s got to be simple.’” That simplicity would include everything from uploading invoices to getting factoring in place to arranging payments in different currencies. Ideally, buyers and suppliers should instantly know what is going to be paid and move that money instantly, without having to wait months to get transactions settled.

As Marraccini told PYMNTS: “It’s not business as usual anymore. We’ve got to start pushing the envelope even harder now that we’re starting to come out of the pandemic … the ‘user experience’ in B2B payments will look very similar to what we’re doing in consumer payments today.”