Credit Cards See Growth as Part of Global Business Payments Mix

All eyes are on the supply chain snarls — the logistics headaches that may leave shelves bare during the all-important holiday shopping season.

In an interview with PYMNTS’ Karen Webster, Dean M. Leavitt, CEO of B2B provider Boost Payment Solutions, said that freight and logistics is just one segment within B2B that’s ripe for a shift from the antiquated processes that dominate a $125 trillion payments opportunity.

Along the way, he said, commercial card payments will gain scale to the benefit of buyers and suppliers across any number of verticals, from healthcare to utilities — and the U.S. will take a cue from other nations around the globe.

The urgency is there. As PYMNTS and Mastercard found in a survey of more than 400 middle-market companies across the healthcare and freight and logistics sectors, more than a third of respondents — 39% — said it is taking them longer to get paid in 2021, even as the pandemic is ebbing, than it did in 2019.

It could be that there’s a “gap,” a difference in the technological capabilities of larger firms that are paying their smaller trading partners. Whereas larger companies have embraced technologies through the past couple of years to handle payments during the pandemic, smaller firms may not have had the resources to do so. Working capital constraints can be a hindrance to improving back-end functions.

At a high level, Leavitt told Webster, the digital transformations in B2B tend to lag behind advances in consumer-facing payments. Or, as he observed, “B2B commerce is often a reflection, down the road, of consumer spend.”

But automating accounts payable (AP) and accounts receivable (AR) functions can have significant, positive ripple effects for enterprises. The PYMNTS data show, for example, that automation helped companies cut their days sales outstanding (DSO) by 10 days.

With Boost acting, in Leavitt’s words, as a “bridge between the ‘worlds’ of AP and AR, we are seeing some new and interesting technologies that allow larger institutions” to approve invoices more quickly, and to address limitations stemming from manual, paper-based processes.

Platforms such as Boost can help enterprises streamline invoice-related workflows by “scoring” invoices so they can be paid more quickly, which is especially useful when firms have repeat suppliers, he said.

Buyers can “simply hit that ‘pay’ button, and that means the supplier can get paid almost instantly,” said Leavitt. And because a significant amount of activity on Boost is card-based, suppliers gain the benefit of getting paid relatively early, while buyers still have the working capital benefit of the “grace period” that lasts until transactions settle.

Whatever the type of B2B payment at hand, firms must have the ability to receive invoices in digital modes. Many countries outside the U.S. “are way ahead” in some cases due to regulatory mandate, Leavitt said. Payers and receivers also need to be able to consider a range of payment options once the invoice has been approved.

Drilling Into the Verticals

Leavitt pointed to telecommunications, manufacturing and media as verticals in dire need of automation. But perhaps most glaringly, freight and logistics represents a “global mess,” and Boost is involved in as many 20 projects in as many countries to help resolve frictions in the vertical.

“It’s a complicated series of ecosystems,” he said. “Maritime, road hauling, air and rail each have their own idiosyncrasies.”

Fixing what’s broken within the supply chains can be tackled — at least a bit — by a new class of technologies, platforms that are sitting in between the shippers, carriers and freight providers. With those technologies come the payments.

Leavitt said that when the appropriate moment comes that a payment must be made, Boost receives a trigger, processes the payment, ensures the data is exchanged properly and “kicks back” to the logistics platform the results of the transaction.

Having those platforms sitting in the middle of these orders, Boost is already seeing an impact on the operational efficiencies associated with freight and logistics, Leavitt said.

Boosting Card Acceptance

Boost’s efforts to increase card acceptance are decidedly global in scope. Leavitt pointed to the company’s announcement earlier this month that it has expanded its partnership with Mastercard to focus on increasing commercial card acceptance globally. Referred to as GAP, or Global Acceleration Program, the initial focus will be on markets including the U.S., Canada, Mexico, Brazil, Western Europe, Australia and the U.K.

Read more: Boost, Mastercard, Join Forces to Increase Commercial Card Use

“We’re focused both on the [accounts payable] and the [accounts receivable] side in all of these regions,” Leavitt said.

The company will target telecom and manufacturing, among others, to implement a wide range of AP and AR programs.

A tremendous opportunity lies within these selected regions. The initial focus of the partnership is on Mastercard-branded card products running through the Boost Intercept and Dynamic Boost platforms. However, you can’t solve the problems of enterprise payees by just focusing on the card rails, so the solutions Boost is bringing to market are designed to augment other payment modalities.

The expanded Mastercard relationship comes as card acceptance has accelerated — and as payments, in general, are moving toward a point where the costs of transactions done across card and non-card rails are converging.

The industry has struggled to overcome the perception that card payments are more expensive than account-to-account (A2A) transfers, wire payments, ACH payments and other methods. But Leavitt pointed out that platforms are starting to lower the cost of B2B transactions. He cited Boost’s application of proprietary interchange rates.

As such, he said, Boost and other providers need to “dispel misperceptions about the costs” tied to cards. Among the advantages: Suppliers can get payments acceptance on their own terms.

“Suppliers often don’t realize that they are paying quite a bit of money to receive payments outside cards,” Leavitt said.

Inefficient processes and human error can wind up being costly for companies in terms of time spent waiting for the correct reconciliation, and the eventual settlement of funds.

As Leavitt told Webster: “The ‘perfect [good] storm’ is when we can expand a buyer’s [days payable outstanding (DPO)] while at the same time reducing the supplier’s DSO and having that enhanced data exchange among the parties. So, it’s a win-win.”