Integrated Workflows Fuel Cross-Border B2B Payments

There are a lot of moving parts in B2B payments that are keeping corporate finance executives busy as they work to modernize and optimize their operations. In 2020, many of the biggest pain points in B2B payments were revealed, particularly when transactions move across border. But organizations are rising to the challenge with a renewed modernization effort that has carried into the new year.

An estimated $10 trillion in B2B payment flows move across border every year, yet only a small fraction of that volume is digital. To make meaningful progress, the enterprise will need to begin looking at B2B payments not as a siloed process, but as an integrated, strategic workflow.

PYMNTS CEO Karen Webster held a panel discussion with Transfermate CEO Sinead FitzmauriceCoupa Executive Vice President Ravi Thakur and Wells Fargo Head of Global Product Management Judd Holroyde to discuss what it means for organizations to step back and look at the bigger picture of cross-border payments.

“We tend to talk about payments as some independent component,” said Holroyde. “But it’s an end-to-end workflow.”

Marrying Payments With Data

There were a few standout moments in 2020 for corporates that led to a deeper level of understanding of B2B payments as part of an integrated workflow. According to Holroyde, organizations began to have conversations about what it means for the enterprise to act as an ecosystem of interconnected platforms and processes. Rather than the transaction originating within an enterprise resource planning (ERP) or treasury management system, application programming interfaces (APIs) have shifted the perception of where a payment starts and ends.

They have also intensified the need for finance professionals to close the gap between a payment and transaction data, with integrations allowing for a more seamless flow of information. That’s a critical shift as organizations found themselves needing to access data and make decisions in real-time amid COVID-fueled volatility.

“Having information at your fingertips to adapt to that environment very, very fast is key,” said Fitzmaurice. “From a cash flow point of view, if you’ve got a decentralized system outside of your core system, it’s very difficult to pinpoint where your cash flow cycle is, both from an AR [accounts receivable] and AP [accounts payable] point of view.”

When organizations are managing multiple ERPs, bank accounts, and platforms all across various global markets, data integration is vital to obtain a holistic view of the payments workflow. As Thakur noted, the opportunity to consolidate complex systems through treasury and banking integrations is vast.

Emerging Ecosystems

Rather than viewing payments and data as two “parallel tracks,” initiatives like the ISO 20022 messaging standard have helped to fuel their coupling. It’s an important step toward streamlining cross-border transactions, said Holroyde, but as organizations look out into the year ahead, there will be more ways that data fuels the formation of vital ecosystems.

Data connectivity isn’t only important within the enterprise’s own infrastructure, for instance. As Thakur noted, it’s also key to deepening connections between corporates and their suppliers. Remitting information from a legacy, siloed ERP system to a business partner continues to be a key pain point, he said, and last year raised the importance of unlocking data to fuel B2B collaboration.

“What we saw with COVID is the move to digitalization,” he said, “and now it’s about collaboration. How do you get information from your suppliers? How do you bring it into your system?”

This spirit of cooperation fueled by data is also promoting the creation and expansion of ecosystems of service providers fueling cross-border B2B payments. Holroyde forecasted that 2021 and beyond will see an acceleration of collaboration between banks and FinTechs.

“When I look at FinTechs-versus-financial services, the reality is the competition that those two marketplaces generate actually generate innovative partnerships between themselves that create that bridge to progress,” he said.

Corporate Priorities Ahead

As these ecosystems of integrated workflows, technologies, corporates and their financial service providers continue to evolve, the mindset of how to tackle friction in cross-border B2B payments will similarly shift, but not without overcoming some hurdles first.

The emergence of faster and real-time payments, for example, may further drive the concept of real-time cash and liquidity management, but not until corporates can overcome their hesitations. Both Fitzmaurice and Thakur said the continued drive toward integration and data connectivity can help alleviate concerns, like that of fraud. At the same time, viewing real-time payments not as an independent process but as part of a broader ecosystem of B2B payment tools can also enable finance professionals to be more strategic about how they pay their overseas suppliers.

After wading through months of uncertainty, the enterprise has gained a bit more clarity going into 2021. As organizations define their strategic goals, their opportunities to optimize cross-border B2B payments will proliferate, but only if they are able to reshape their view of the transaction as an integrated piece of a larger workflow.

With trillions of dollars’ worth of cross-border B2B transactions ready to not only be digitized, but optimized, financial service providers also have their work cut out for them as members of this ecosystem to rethink the way money — and data — move across borders.

“I think we’ll start to see a more aggressive understanding, and therefore evolution, of the pain points in the core financial services infrastructure,” said Holroyde.