Businesses Lack Knowledge About Modernized Payments Choices and Developments

Digital Payment Adoption Drives Business Growth

It’s what you don’t know that can hurt you.

The old saying holds true in payments, and especially in B2B payments.

To that end, PYMNTS’ study “The Treasurer’s Guide to AR Optimization,” done in collaboration with CheckAlt, found that 33% of chief financial officers (CFOs) said that digitizing accounts payable (AP) and accounts receivable (AR) operations would “introduce options for payment that were not available before.”

Get the study: The Treasurer’s Guide to AR Payment Optimization

That stat raises a thought. The implication is that two-thirds of executives either don’t know, or don’t think, that modernization will expand choice — how they pay, yes, but also in how they are paid — up and down supply chains.

Read more: Businesses Turn to Next-Gen Payment Systems to Streamline Supply Chains

The implied ripple effects are significant. Without the mulling over of what could be, there’s no recognition of what should be. Roughly 50% of B2B payments are done through paper checks, which gives a nod to the fact that in the 21st century, despite our comfort with cellphones, computers and eCommerce done through the likes of Amazon, the old ways of doing things remain entrenched.

Still Sticking With Checks

That leads to friction in the mix between buyers and suppliers. Take into account that the wholesale market is worth $64 trillion, and well, that’s a lot of friction, measured in longer cash conversion cycles, where revenues eventually become dollars in the bank.

Indeed, a separate PYMNTS’ study found between 30% and 35% of firms state that lack of payments choice proves problematic. Put those two studies together, and roughly one-third see choice as an issue that needs to be addressed, but only one-third of executives see digitization as a key way to enable expanded choice as buyers and suppliers interact.

See more: Only 30% of Businesses Believe Current B2B Payment Solutions Are Very Effective

There are any number of examples relayed in these online pages on the benefits of B2B upgrades. In one interview, Dan DeVall, vice president of business development and director of banking alliances at Airbase, told PYMNTS that virtual cards can help hasten that evolution in an environment where 80% of buyer-to-supplier transactions could be completed electronically by 2025.

Read more: Virtual Cards Bring Spend Management Into the Digital Age

Virtual cards can improve the relationships and level the playing field between buyers and suppliers. DeVall said that for many suppliers, virtual cards offer a rich integration into the purchase workflow, which can eliminate tasks such as having to process an invoice.

“You can have a spirit of collaboration that was not there before,” he told PYMNTS.

Additionally, embedded finance can help streamline and improve the business payments flow.

See more: B2B Firms Eye Embedded Finance Payment Options

What may be key to getting there is illumination that the way it’s always been done — i.e., through paper checks — need not be the way it should always be done.