The great digital shift feels so pervasive, so ingrained, that we’d be hard-pressed to find a part of daily life that hasn’t been transformed — where cash, phone calls and all manner of interactions, including handing over plastic cards, person to person, hasn’t been altered profoundly.
But then again, we see things through the prism of what we’re doing — and at any given moment, most of us are acting as consumers: planning, clicking, checking out or waiting for the next Amazon package to arrive.
Working from home, too, is dominated by Zoom calls and laptops. Thus, the pivot toward eCommerce and friction-free payments seems, well, par for the course.
But in the background, the machinery that keeps it humming – the supply chains and the links between businesses, across borders, time zones and currencies – is anything but efficient. The multi-trillion-dollar B2B payments space is still rife with friction – with faxes, even – dominated by paper where streamlined processes are urgently needed.
Poised For Disruption
Flywire pointed to the staggering size of the market itself, poised for disruption, in its S-1 filing with the Securities and Exchange Commission (SEC). As noted in this space earlier in the week, the company said the cross-border B2B space has $10 trillion in addressable payment volume that could be addressed by Flywire through tech solutions.
Data gleaned from PYMNTS and Flywire collaborations show the size and scope of the frictions: Roughly 75 percent of tech firms, for example, view their payment operations as only “somewhat effective” at best. And those same tech firms state that there as many as 10 accounts receivable (AR)-related functions across which companies work with third parties.
Elsewhere, PYMNTS/Visa research has found that about 76 percent of SMBs have been struggling with cash flow. That’s in part due to the fact that back offices are still dominated by archaic processes. The global stage is a huge one, with $120 trillion in volume.
None of this is to say that companies are unaware of what’s on offer, or of what could be deployed to replace the invoice and the paper check. Roughly 91 percent of companies surveyed by Visa/PYMNTS have said they are interested in real-time settlement.
And against that backdrop, any number of digital-first and digital-only (read: FinTech) firms have been tackling the frictions inherent in the space. Ryan Frere, EVP and GM, B2B at Flywire, told Karen Webster in a recent interview that transparency is a key goal. Typically, he said, “you have finance teams answering customer calls asking ‘Where’s my money?’ or ‘How do I make this payment?’ or ‘Did you get my payment?’ Transparency into that data is really critical at the end of the day.” There’s been a growing emphasis on solving AR frictions through RTP or (digital) lockbox tools, he told Webster.
That’s especially important, as yet another study – the Innovating B2B Payments report – finds that 26 percent of U.S. and U.K. firms’ annual sales are done cross-border. And it’s encouraging to find, as this collaboration between PYMNTS and i2c showed, that 64 percent of companies have been moving away from physical invoices. The younger generation is taking over the B2B workflow, it seems, with about 73 percent of B2B purchasing decisions being made by millennials and younger workers.
Bit by bit, but surely, the great digital shift is transforming B2B (and, by extension, cross-border B2B) payments.
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