While dozens of industry executives took part this fall in PYMNTS “Ten Minutes With…” interviews, five key themes emerged from our expert panelists concerning the future of digitized business — including greater visibility, easier access to credit, faster processes, more consumer-like transactions in the B2B space and an eventual recognition of the advantages of cryptocurrency.
Going Digital Boosts Visibility
These days, businesses desire comprehensive solutions that not only accelerate and automate the payments flow, but also provide business intelligence that can aid in their decision-making, said Patricia Montesi, chief executive of Qolo.
“It’s not just about the expense savings from converting checks to something more digital,” Montesi said. “There’s a desire to go beyond the automation side to bring in insights, so not only can you do your payables and receivables, but you can also use the data it generates to gain insights into how to run your organization faster, better and smoother.”
Read more: Untangling the ‘Sticky Web’ of B2B Payments Starts With the Value Proposition
Indeed, many businesses have found that by going digital, they gain more visibility, leading to more clarity over exactly when they’ll get paid, said Matt Clark, president and chief operating officer at Corcentric. With increased visibility, it also becomes much easier to reconcile payments received with each transaction.
“That has been a huge challenge in the past,” Clark said. “Companies would get a huge lump of money hitting their bank account, and while that’s great, they struggled to reconcile that against what the money was intended to pay for.”
See also: B2B’s Shift to Digital Payments Drives Healthier Balance Sheet
Visibility also has a part to play in business verification. Artificial intelligence (AI) is ideally suited to this task, because establishing an organization’s identity is a complex task, said Sudhir Jha, Mastercard senior vice president and head of Brighterion. For example, businesses can be incorporated in various ways and operate under a different name from their legal identity, morphing into different identities.
“There’s a lot of complexity, but AI actually loves complexity,” Jha said. “It can make sense of all of the changes that have happened historically, it can piece them together and tell us which are meaningful, which are predictable and normal, and which ones are maybe something that shouldn’t be happening.”
Related: AI’s Love of Complexity Is Perfect Match for Digital Business Verification
Visibility Facilitates Access to Credit
Information also eases access to credit. Shan Han, chief executive of Zetl, said that to be able to finance young startups — many of which have no real credit history or report to speak of — Zetl has developed a proprietary credit model that relies on alternative data. The company has a clear “digital-first” approach where virtually all the information collection process is automated.
“For a lot of customers it’s not just the cost of the financing itself, but also how much time are they spending going out and seeking this capital,” Han said.
See also: Asia Pacific’s Next Big Finance Opportunity: Giving Credit Where There is None
The simplest way to close trade credit gaps is to make it more attractive for financiers to provide credit access to small- to medium-sized businesses (SMBs) without usurious terms, so suppliers will go for it, said Jesse Chenard, chief executive of MonetaGo.
In order to do that, there must be a much bigger push toward digitization, such as putting invoices into a digital account system that allows it to be verified more easily.
“That’s really the first step: getting the actual goods, invoices and inventory digitized and then being able to present that to banks,” Chenard said.
Read more: Suppliers ‘Left Holding the Bag’ Due to Sluggish Trade, Un-Digitized Payments
Nuula, too, is looking for better ways to help small businesses gain more opportunities to obtain funding during crucial moments, said Mark Ruddock, chief executive of Nuula. To do so, it’s combining traditional credit profiles and cash flow data with more nuanced information that provides useful insights into how a business is doing.
“We want to look at reputation, and whether or not customers are coming back to that business,” Ruddock said. “We also look at core financials and their Shopify and payments data as ways of triangulating and inferring the health of a business.”
Related: Reputation Matters: Customer Sentiment Tracking Extends Credit Opportunities to SMBs
Technology Speeds up the Whole Process
Minimizing the headaches from the B2B world’s reliance on outdated, paper-based checks and legacy infrastructures has been a focus at Virta Health, said Alok Bhushan, CFO of Virta Health. This includes minimizing the B2B world’s reliance on outdated, paper-based checks and legacy infrastructures
Technology has led the way in everything from receivables to payables and treasury to tax.
“It makes the whole process really easy—even more so on the approvals and workflow side than on the payments side,” Bhushan said.
Read more: Donning Many Hats, the CFO Must Play a Vital Role in Business Digitization
The foundations of “just in time” business transactions have already been laid, as recent years have seen a lot of networks spring up to help facilitate the exchange of various business documents, said Mike Kresse, division executive of B2B and Money Movement at FIS. The key now, which is something FIS is working on, is to connect those networks.
“At FIS, we’re working with various card network providers, B2B payments and B2B receivable solutions providers to extend that overall ‘uber network,’” Kresse said.
See also: One-Stop ‘Uber Networks’ Will Drive Consumerization of Business and ‘Just-in-Time’ Payments
Digital Solutions Make B2B Transactions More Consumer-Like
As much as business-to-business (B2B) payments are trying to catch up with the simplicity of consumer payments, the added complexity of commercial transactions makes the process that much more difficult, said Ajay Gopal, chief executive at Tinvio.
To solve this, what’s likely to emerge will be a number of highly targeted B2B payment solutions that solve some very specific use cases.
“That’s where startups also have an opportunity to go in and say, ‘Hey, complex is not a problem,’ and go and create user experiences that simplify that kind of complexity,” Gopal said.
Read more: Clean Reconciliation Will Be the Biggest Benefit of Speedier B2B Payments
B2B payments have been a long-term laggard compared to their consumer counterparts, as many old-school paper checks and disconnected legacy software systems contribute to payment delays that can take weeks. However, that reality is changing, said Thomas Priore, executive chairman and CEO of Priority Technology Holdings.
“Statistically, we’ve seen 100% year-over-year growth in the adoption of card-based payments on our platform,” Priore said. “There’s a comfort level that consumers have always had with their card, and that’s being translated into their business lives.”
Related: Digital B2B Payments Evolution Headed Toward Virtual Wallets, Predictive Analytics
An idealized business payment would involve the ability to make electronic payments without having to exchange banking information, said Chris Ward, EVP and head of digital and innovation for treasury management at PNC. We may get there, sooner rather than later, as 40% of B2B payments may be conducted in this way by 2025, Ward added.
“If I could wave my magic wand and get everybody to be able to conduct alias oriented payments, do it in a way that you have extreme confidence that the transaction went all the way through, and the dollars and data are moving together, that would be the answer to the riddle,” Ward said.
See also: PNC on Killing B2B’s ‘Sacred Cows’ on the Road to Better Payments Experiences
Cryptocurrencies Will Prove Advantageous
Businesses are keenly aware of the potential crypto holds, but several obstacles remain in the way in terms of mass adoption for B2B payments, said Jeremy Tan, CEO of Liquid Group. However, blockchain technology is fundamentally a very stable way to distribute value that is not going away.
“Eventually it will balance out, and crypto will reach a certain stage where, from a technology perspective, it is advantageous,” Tan said.
Read more: Banks Understand Crypto’s B2B Potential But Will Take ‘Baby Steps’ All the Way
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