Companies face two primary problems when making payments to suppliers: invoice reconciliation issues and a lack of supplier portals.
In fact, each of those problems were cited by about 42% of financial institutions when they were asked about common problems their corporate clients face when paying suppliers, according to “Meeting the Challenge of Payments Modernization,” a PYMNTS and FIS collaboration based on a survey of 311 executives working as head of treasury services or wholesale banking at large international banks, regional banks, community banks and credit unions.
Get the report: Meeting the Challenge of Payments Modernization
What’s more, 15% of the executives surveyed said the inability to offer supplier portals was the most important problem companies confront when paying suppliers, while 9% said the same about reconciling invoices.
Modernizing the B2B Ecosystem
Financial institutions continue to modernize their business-to-business (B2B) payments ecosystem, addressing corporate clients’ need for streamlined payments and cash management while relieving their invoice reconciliation issues and lack of supplier portals.
There is no singular perfect solution, however, as data indicates that financial institutions’ effectiveness in addressing customer needs varies by client size or market served.
PYMNTS data finds that financial institutions serving cross-border payments customers and large enterprises tend to provide more digital solutions than those serving middle-market companies and small businesses. In fact, just about one-third of all financial institutions surveyed said they effectively limit B2B payments and cash management frictions for their clients, yet three-quarters or more of financial institutions serving cross-border payments customers and large enterprises said that they have been successful in this task.
For example, financial institutions serving cross-border payments customers and large enterprises are most likely to provide automatic matching of payments and invoices — at 48% and 49% respectively — while just 45% of those serving middle-market firms and 33% of those serving small businesses do so.
Supplier portal adoption exhibits a similar gap: While 65% of financial institutions serving cross-border payments customers and 51% serving large enterprises currently provide supplier portals, just 32% of those serving middle-market firms and 15% of those serving small businesses do so.
Pursuing a Better Customer Experience
Financial institutions face numerous challenges when looking to meet their corporate clients’ B2B payments requirements across a wide variety of markets.
Understanding what drives different corporate markets can guide financial institutions as they further modernize and streamline their B2B payments and cash management offerings.
Financial institutions serving large enterprises and cross-border payment customers seem well on their way to innovating digital solutions to modernize B2B payments and even embedded finance experiences, regularly leading the pack.
However, those serving middle-market companies and small businesses have yet to fully realize the potential of B2B payments innovation, and creating a technology stack or solutions can become resource-prohibitive, or solutions can be inadequate for these companies in particular.
Application programming interfaces (APIs) can help financial institutions transform B2B payments, FIS Vice President, B2B Solutions Neeraj Gupta told PYMNTS in a June 27 interview.
Access to the software intermediaries that allow two applications to talk to each other is key in doing so, in giving the flexibility needed to meet new expectations among individual and commercial clients. Gupta said an API ecosystem introduces an era of customization where bank products and services are tailored to the individual customer.
As he told PYMNTS, “The broader API ecosystem is, ultimately, a means to an end, offering new ways to organize data in pursuit of a better customer experience.”
Considering an enterprise-grade technology solution could help put financial institutions and their corporate clients on the fast track to innovation.