66% of Businesses Now Collect Credit Info on New Suppliers

In the B2B ecosystem, firms must complete complex onboarding processes to set customers up for new transactions and vet new suppliers or vendors. While this often continues throughout the entire invoice approval and payment process, there isn’t a standard operating procedure for it.

Onboarding can consist of many different analysis types, and most seek to assess the financial reliability of new vendors or partners. As part of that process, 66% of businesses collect new suppliers’ credit information, and 45% collect data on suppliers’ past financial performances, according to the “Innovating B2B Retail Payments Playbook,” a PYMNTS and MSTS collaboration.

Read more: Innovating B2B Retail Payments Playbook

Gathering these details helps vendors ensure that new suppliers can pay on time and in accordance with contract terms.

Nipping Fraud in the Bud

This is especially important at a time when payments fraud is coming in many forms and from many different places.

See more: Protecting Corporate Payments Requires Collaboration on Multiple Fronts

Fighting fraud is a big-picture process that tends to be more complex and labor-intensive in the B2B ecosystem than in the business-to-consumer (B2C) ecosystem.

In the B2B market, where payments are larger and where there is no single point of sale (POS), the fight against fraud looks far different. Larger payments come with higher stakes, which puts pressure on businesses to nip fraud in the bud before they begin the long, drawn-out internal review processes necessary to approve most businesses’ invoices.

Digital onboarding tools also help businesses assess new partners’ creditworthiness and determine the appropriate credit limits to offer, providing a digital fingerprint from which data is collected.

Many merchants’ onboarding processes also require screening new partners to determine their legal statuses. This often includes ensuring that they’re certified or licensed — or checking to see if they are on international sanctions lists. It is highly likely that business customers will want to screen new suppliers, meaning the latter will have to comply with the former’s unique supplier authentication processes.

Assessing Businesses Quickly and Easily

Many businesses still rely on manual onboarding processes, too, and passing physical documents between different stakeholders within an organization is more difficult and labor-intensive than sending and receiving them via email or a web portal. This can cause significant strains on B2B businesses as they collect and submit documentation to comply with new business partners’ authentication protocols.

Firms can use accounts receivable (AR) innovations to quickly and easily assess whether the businesses they onboard are trustworthy. Artificial intelligence (AI) and machine learning (ML) technologies can automate the authentication process, decreasing the need for manual review and verifying new vendors with greater accuracy.

Beyond the onboarding process, digital anti-fraud innovations — particularly those that leverage AI- and ML-based behavioral monitoring and analytics to automate the AR process — can go a long way toward speeding and streamlining the fraud screening portion of B2B transactions. These and similar technologies can detect potential fraud in real time and use automation to make know your customer (KYC) and anti-money laundering (AML) compliance faster and easier for both parties.