Buyers, Suppliers Find Common Ground With Digital Lockboxes

Goodwill and collaboration go a long way in maintaining long-lasting business relationships in today’s connected eCommerce environment.

As a growing number of businesses transition from paper checks to digital payments, they’re looking to not only improve their cash flows and streamline their accounts receivable (AR) and accounts payable (AP) processes, but also strengthen their collaborations with their trading partners.

Trading partners that make and receive payments digitally report increases in overall customer satisfaction, more flexibility in the payment options they offer and increased book-balancing efficiency, according to “Reimagining Business Payments,” a PYMNTS and Billtrust collaboration.

Get the report: Reimagining Business Payments

For example, digital lockboxes can receive payments and quickly match remittance information while sending the information almost simultaneously to enterprise resource planning (ERP) systems. The result is a high match rate of invoice payments and more easily balanced books — both of which can help improve customer satisfaction.

Overcoming Common Obstacles

Buyers and suppliers have relied on inefficient AR and AP processes limited by outdated legacy computer systems and software. Often, this lack of interoperability results in delayed B2B payments, errors, fraud, a lack of payment data, cash flow challenges and other problems that can prevent companies from delivering the type of instantaneous financial transactions that their business partners expect.

These common problems are giving a chance for firms making and receiving payments to find common ground, Billtrust CEO Flint Lane told PYMNTS in a February interview.

Read more: Digital Lockboxes Tackle B2B Payments Mail Float Problem

The current inefficiencies are driving businesses to adopt more digital B2B payment methods. Digital payments technologies can strengthen enterprise organizations looking to simplify and streamline their payments flows.

Turning to Digital Lockboxes

Many organizations fast-tracking their digitization efforts are also turning to digital lockboxes to secure those digital payments.

A digital lockbox essentially serves as a central clearinghouse that can automate and process payment remittance information that it receives from direct and indirect channels such as email, phone, AP portals and self-service portals. Digital lockboxes offer speed, security and interoperability, giving both buyers and suppliers a way to align payment choice and streamline payments via one integration across multiple AP providers, card issuers, banks and ERP systems.

A digital lockbox can help organizations improve the collaborative commerce quotient with their customers by encouraging collaboration between buyers and sellers as well as optimizing transactions and reducing the work involved in sending, receiving and reconciling payment information.

A digital lockbox can help businesses take a collaborative approach to generating and processing invoicing and payments. Digital lockboxes can ensure payments arrive quickly and securely with remittance data integrated directly into an AP or ERP solution, ready to be reconciled in the monthly books.

Digital lockboxes allow businesses to streamline electronic B2B payments’ delivery to vendors’ application programming interfaces (APIs) and AR platforms.

Optimizing Both Sides

A payments network that can administer a digital lockbox provides a directory of suppliers’ payment preferences to enterprise buyers’ AP providers. This gives the AP providers insight into which forms of payment their customers’ suppliers will accept and enables the providers to initiate payments once the buyer approves the invoice.

The payments network allows suppliers to receive multichannel digital payments into a digital lockbox without needing to worry about finding uncoupled remittance data. The digital lockbox then moves funds into the suppliers’ bank and sends remittance data to the supplier’s ERP solution for cash application, cutting out the need for human interaction and time-consuming processing tasks.