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Small Steps, Big Change: Unlocking Growth by Modernizing B2B Payments

Boost Payment Solutions, B2B Payments, Accounts Payable

Completing a series of small steps is an easy way to make a big change.

This is particularly true as organizations look to modernize their B2B payments workflows and block and tackle legacy processes.

While the value inherent in eliminating manual processes tied to cash management and improving accounts payable (AP) and accounts receivable (AR) functions may appear to be an obvious one, it is often overlooked as a way to activate growth.

Despite decades of investment in digital technology and innovation, the maturity of B2B payments programs increasingly remains varied across businesses of all sizes.

After all, an object at rest stays at rest, and that holds true for the type of institutional inertia that can hinder the adoption of new technology.

To overcome this inertia, businesses can first identify their pain points and objectives. Digital transformation initiatives, particularly those centered around B2B payments, need to be intentional, and it’s important to deploy a holistic, multifaceted approach to modernizing functions like AP and AR.

While modernizing something as entrenched into business workflows as a decades-old AP or AR program may take some coaxing, companies that wait too long to integrate innovations into their B2B payments workflows could risk falling behind their competitors and miss out on potential efficiencies as next-generation capabilities continue to evolve.

At its heart, the question of B2B payments transformation is all about friction. Is the friction in existing workflows big enough to get organizations to change the way they’ve always made and received payments, and are the solutions in the marketplace good enough to make them?

Read also: Death by Paper Cut: The Hidden Costs of Checks

Slow Adopter or Fast Follower

When it comes to innovating the way that B2B payments move, it is OK to start small and work your way up.

“You don’t want to boil the ocean and try to solve for everything at once,” Corcentric CEO Matt Clark told PYMNTS in June. “Firms need to look at [transforming their existing processes] as a kind of crawl-walk-run mentality to get to where they need to go.”

The first step is acknowledging that legacy processes can lead to errors and failures, while by embracing digital transformations and prioritizing innovative enhancements, firms can streamline their operations and improve efficiency — while also making things easier for commercial customers.

“Creaking, older legacy platforms” are struggling to adapt to new demands, Form3 U.S. CEO Dave Scola told PYMNTS.

The benefits that modern AP and AR platforms bring offer an appealing trait at a time when many companies are hunting for cost-cutting opportunities.

“The world of business today is moving super-fast, and that certainly applies to the realm of accounts payable and accounts receivable,” Nathan Bhatt, vice president of B2B products and partnerships at American Express, told PYMNTS this month.

“Research shows that automating accounts payable processes can save finance teams on average 9.9 hours per week,” he added. “That’s over 500 hours per year, which represents a huge saving for business leaders — especially those looking to juggle a huge set of priorities while trying to focus on what matters: growing their business.”

See also: The Trickledown Consumerization of B2B Payments Helps Firms Win Business

New B2B Tech Reshapes Buyer-Supplier Dynamics

The technical architecture around B2B payments can help set businesses up for success by making them a more attractive and easier partner to work with.

“In a B2B business, the finance function itself is part of the customer experience,” Aanchal Kochhar, head of product at Capital One Trade Credit, told PYMNTS this month. “You can delight customers and capture more customers when underwriting is seamless, the credit process is seamless, and how money flows is seamless and with less error. There is a lot of growth potential.”

Given the state of today’s macro environment, organizations are looking to get cash into their businesses as soon as possible as well as have the relevant data and transparency around how much access to cash and liquidity they have on hand at any moment.

Modernizing B2B payments can help take away a lot of the operational friction, opacity and historical dynamics that plague commercial transactions.

As Corcentric’s Clark told PYMNTS in June, in the past, B2B payments were “somewhat of a staring contest,” where whoever “has the biggest stick makes the other party conform to the way they want to do it — which is not sustainable and causes a lot of pain and migraines for organizations.”

For businesses, having their B2B payments experience stuck in the same manual processes from the 20th century is increasingly leaving them blind to their short-term cash positions and seeing them fall behind peers who can leverage payments data to inform working capital strategies.

“I think B2B will naturally demand to adopt what is productive and expected … with an added element of expectations of business workflows needing to be optimized around the payment,” Katelyn McCarthy, vice president of strategy and business development at Discover® Global Network, told PYMNTS this month, adding that, “the payments sector will continue to experience growth in digital payments, and there will be opportunities in a couple of different areas.”

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