Re-imagining business payments will take input from stakeholders across the ecosystem — banks, payments networks, enterprises and FinTechs among them — to benefit buyers and suppliers.
In a panel moderated by Flint Lane, founder and CEO at Billtrust, a trio of payments professionals said that bringing commercial payments fully into the digital age will be speedier and streamlined with quantifiable metrics that show returns on investment and better cash flow metrics.
Panelists included Veronica Fernandez, SVP, North America Head at Visa Business Solutions; Rajiv Ramachandran, SVP Product Strategy at Coupa and Ken Gavrity, EVP, Head of Payments at KeyBank.
But as Flint cautioned, concrete goals must be in place in the pursuit of optimally digitized business payments.
The Specifics in the Mix
As he put it: “There need to be specifics: What does that mean? When is that going to happen? Right. Are we going to drive 80% of our payments digital across certain rails?” Different industries have different metrics, said the panelists, and it may be possible to find “benchmark” — say, hypothetically, an industry leader that has moved 85% of its invoices online.
Gavrity noted that, by and large, middle-market companies, with revenues between $10 million to $2 billion, are most resource-constrained but could benefit, especially from back-office automation. A holistic view of the organization is critical for survival — and, contended panelists, a platform approach can help.
Said Ramachandran: A platform can connect to both sides of the transaction — the buyers and suppliers — and integrate with the banks and the networks.
That holistic approach might be, in a sense, captured in Coupa’s journey from its roots as a firm rooted in procure to pay, but where the firm has expanded into payment and business spend management (via its platform approach). Coupa, he said, exists as a “platform with two communities,” marked by the buyers on one side of the equation and merchant/suppliers on the other side of the equation.
“As we went through this journey it was clear that the customers were looking for one ‘unified experience,’” said Ramachandran, with visibility from purchase order to invoice. But in getting there, it’s been important to break down the silos within companies, where processes have been manual and inefficient, and where capturing data flows across the buyer/supplier continuum has been critical.
Billtrust’s Lane noted that the drive toward a unified experience extends to the back office as well, as enterprises have sought to avoid the integration heavy-lifting that comes with trying to “weave together” several different vendors to gain a view of receivables activity.
In the spirit of collaboration, said the panelists, the move toward innovation — indeed, re-imagining business payments — has brought banks, FinTechs, card networks, and enterprises together, rather than fostering an “us vs. them” mentality. Lane remarked that initially, it did not look like banks would take an active role in modernizing accounts receivable and payables management. They had, after all, “sat out” other trends like payroll.
But as KeyBank’s Gavrity noted, the “inflection point” seen a few years ago, when investors poured money into FinTechs, helped bring banks more fully into the fold.
“It became clear that there was more value in solving [wider] frictions than just the payment transfers themselves,” said Gavrity. “It became a ‘eureka’ moment for us.” With a nod toward Visa’s strategy, Visa’s Fernandez said that the “network strategy” has been an overarching theme for the payments giant, where Visa Business Solutions, B2B Connect and other offerings help drive growth in the move to improve commercial payments.
As Fernandez noted, “there is $120 trillion in B2B, globally, that we’ve identified, and $27 trillion in the U.S. alone. There’s clearly a long runway ahead.”
The panelists agreed that there delivering quantifiable results ultimately leads to client satisfaction. Ramachandran said that efficiency metrics — surrounding the digital transformations of payments, invoices and other initiatives – can help point out improvements in cash flow and returns on investment.
These improvements, he said, are not only measured at an (enterprise) customer level but at a community level as well.
“So these customers can look at this data and compare themselves against the best or in their industry. They can compare against their peers, with completely anonymized data,” Ramachandran said.
Visa’s Fernandez noted that the shift to collaborative commerce has helped tip the balance of power in supply chains a bit more fully to suppliers, where providers such as Visa can address pain points.
In re-imagining B2B payments, said Gavrity,” we’ve got to get the cost-benefit equation in the right place.” And for the suppliers, platforms and portals allow for a more dynamic flow of information, along with real-time status reporting and accelerated financing.
Looking Ahead
Given that paper checks still represent about 50% of payments volume in the U.S. — and thus there is room for improvement, panelists offered up what they’d like to see happen in the months and years ahead.
See also: Why Paper Checks Still Factor Into B2B Firms’ Payment Optimization Plans
Visa’s Fernandez stated that B2B payments has been marked by consumerization — where we’ve gotten used to digital means of paying and getting paid. Though checks will be with us for some time, she said digitization would be key to their decline and improving cash flow across supply chains. And, added Gavrity, collaboration and evangelism would help drive digital B2B payments forward.
“It’s incredibly important for businesses to be able to understand the value of getting to the electronic payment,” he said. “We’ve got to make the on-ramps easier as an industry. And then we’ve got to tell this story as many times as we possibly can in as many forums as we can. And I think that’s the way we get there.”
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