As Businesses Crave Efficiency, Will 2023 Be the Year of Embedded Finance?

b2b payments, accounts payable, accounts receivable, embedded finance

As 2022’s digital transformation fuels 2023’s data-driven growth, CFOs are increasingly embracing embedded B2B solutions.

That’s according to research in the latest PYMNTS report, “The AR Transformation Solution: Easing And Accelerating Payments From Business Customers,” which found that organizations which take strategic steps to transform and modernize their accounts receivable (AR) and accounts payable (AP) operations with streamlined and integrated innovations will be more likely to gain a stronger hold of cash flow management, cash flow forecasting, and management of working capital.

Efficiency is the name of the game, and plug-and-play, one-stop embedded finance solutions for B2B payments are could be the star player.

Not only do these digital upgrades help businesses drive operational certainty and improved profitability, but they can also provide improved transparency and the kind of real-time insights that finance leaders and decision makers crave, especially in lean times.

Accelerating Growth

AR drives business growth, but payment frictions and roadblocks including poor vendor AP integration can slow and even stop this growth before it picks up steam.

Businesses increasingly want to use digital channels to pay their suppliers and other businesses, but connecting next generation AR tools to customers’ AP systems can be daunting, especially if those AP processes still include legacy manual operations.

Establishing the right B2B payments network can help remove the technical burden on both sides of the transaction and further alleviate onerous administrative overhead. Scalable payment networks that leverage advanced AR solutions can accelerate payments and provide customers more favorable transaction terms and timelines, while at the same time offering more payment choices.

In fact, studies project that over the next three years, nearly half of all B2B invoices will be issued, processed and paid without any human intervention.

As more businesses evolve their AP and AR systems, the emergence and adoption of one-stop B2B payment networks will enable greater connectivity between order-to-cash functionality and overall payment ecosystems, helping organizations manage cash flows and improve growth, while reducing administrative complexities.

“We’re really focused on finding systems from the front end all the way to the back end that plug into each other,” Justin McMahan, CFO at Abra, told PYMNTS last spring. “We’re trying to stay as unsiloed as possible when it comes to systems.”

Solving for B2B frictions

At the root of payment frictions exist either a technical gap or an expectation gap between buyers and suppliers.

Luckily, embedded finance solutions can help bridge these gaps.

Recent research in PYMNTS’ “The AP/AR Quick-Start Guide” found that while buyers often prefer to pay their suppliers using methods like regular automated clearing house (ACH) or check payments, their suppliers in turn prefer receiving payments through methods that give them faster and easier access to funds, such as real-time payments.

In order to solve for this, organizations can establish a B2B payment network that provides a more convenient digital payment experience powered by embedded finance so as to reduce reliance on disparate payment methods. Leveraging a singular transaction system meets both buyer-supplier needs on either side of the transaction.

More than eight in ten businesses (85%) have recently increased their use or acceptance of digital payments, according to PYMNTS research.

The more digitally automated and centralized an organization’s B2B processes are, the more payments get sent reliably, efficiently and in the expected manner. When that happens, company leaders are more likely to report they’re satisfied with their accounts payable platforms — and the more satisfied their suppliers and vendors are, too.

AR Transformations Bring Results

Running AP and AR operations using spreadsheets, manual processes, and legacy workarounds makes it inherently difficult for a business to build and scale its operations, inadvertently giving competitors and peers a leg up.

Integrated AR solutions can deliver immediate B2B payment wins by accelerating order-to-cash processes, leveraging automation in support of high-level invoice reconciliation accuracy, centralizing AR management processes to ensure faster payments, and promoting enterprise resource planning (ERP) integration that turns rich AR data into actionable insights.

As companies themselves continue to grow and digital marketplace trends advance, so too will B2B expectations and needs as business goals on either side of the transaction evolve.

Next generation B2B payment networks can help provide a competitive moat for businesses by establishing a best-of-all-worlds payment experience that streamlines processes and simplifies invoicing, optimizing working capital and cash flow visibilities.

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