PYMNTS MonitorEdge May 2024

Flexibility and Choice Move B2B Payments From Monolithic to Modernized

Life is a matter of choices, and so, too, is business.

That’s why, when it comes to B2B payments, accepting (and offering) more options can potentially lead to more business.

And with the recent news that American Express (Amex) has teamed with Emburse to embed the former’s virtual card solutions into the latter’s platform; while Dwolla and Visa have partnered to make it easier for mid- to enterprise-size businesses to use pay-by-bank to pay and get paid, offering a variety of B2B payment options is top of mind for firms looking to enhance their market position and unlock new growth opportunities.

That’s because, in the competitive B2B landscape, providing flexible payment solutions can differentiate a company from its competitors. Businesses that offer more payment options are seen as more accommodating and easier to do business with, which can attract new customers who might otherwise go to competitors with less flexible payment systems.

When customers can choose their preferred payment method, it reduces friction in transactions, leading to a better overall experience. Satisfied customers are more likely to remain loyal, repeat business and recommend the company to others.

Additionally, as the imperative of B2B payments modernization marches on, the volume and variety of use cases that require greater flexibility and collaboration between buyers and suppliers is growing, as buyers seek payment terms that align with their cash flow cycles, while suppliers want to ensure timely payment for their goods and services.

Modern solutions, ranging from invoice financing to digital wallets to virtual cards and beyond, are increasingly being leveraged to meet that gap.

Read moreWhy B2B Payments Tomorrow Will Look Like B2C Payments Today

Moving B2B Payments From Monolithic to Modernized 

Embracing B2B payments optionality is helping to evolve buyer-supplier dynamics away from incumbent imbalances, while at the same time allowing firms to tap into new growth opportunities.

“B2B payments haven’t evolved much from the modalities that dominated the landscape 40 or even 50 years ago,” Boost Payment Solutions Chief Operating Officer Illya Shell told PYMNTS.

“The market is young … at this point, only a small percentage of B2B payment flows have been digitized or optimized. … The inflexibility of traditional systems and platforms have prevented lots of companies from moving forward and keeping up with the changing dynamics of the large B2B buyer-supplier relationships,” Shell added.

“The payments modernization winners will be the ones that can rapidly adjust and evolve to meet the needs of their customers,” he said. “Modernizing global B2B payments is an enormous opportunity.”

Different payment methods can help facilitate better cash flow management. For example, digital payment solutions can provide faster transaction processing compared to traditional methods like checks, improving liquidity. Additionally, offering early payment discounts or other flexible benefits can help optimize cash flow depending on particular business situations.

Implementing a range of payment options can also streamline accounting and financial operations. Automated payment systems reduce the need for manual processing, minimize errors and free up resources to focus on strategic activities rather than administrative tasks.

Read more: B2B Virtual Cards Move Buyer-Supplier Relationships From Manual to Meaningful

Giving Business Buyers and Suppliers What They Want 

Fortunately for commercial buyers and suppliers looking to upgrade their B2B payment workflows, the time has never been better, and the marketplace never more full of innovations.

“Digital payments, such as Apple Pay and Google Wallet, are widely accepted in the consumer world and are starting to be introduced into the B2B space,” Aaron LeHew, director of invoice-to-cash at Esker, told PYMNTS. “There’s certainly an appetite and interest in allowing these payment options to come through. And API-driven applications are going to be key to the process of evolving and supporting these integrations into banking platforms and also allowing it to be secure.”

Increasingly, these digital B2B payment innovations are becoming easier to implement compared to their historic peers, resulting in a smoother adoption curve for B2B payment advances.

“The companies that aren’t embracing virtual cards or B2B payments innovations will be the ones that fall behind,” ConnexPay Founder and CEO Bob Kaufman told PYMNTS in March. “The suppliers that are not as flexible and willing to embrace these new forms of payments are going to lose business, while the buyers who are not using them are losing revenue, which results in them not being as competitive in their space.”

Offering diverse payment options, including international payment methods, can help businesses tap into new markets. This is particularly important for companies looking to expand globally. By accommodating local payment preferences, businesses can more easily enter and succeed in foreign markets.

With personalization slowly trickling down to the B2B space, different B2B payment methods are being leveraged to generate a wealth of data that can be analyzed to gain insights into customer behavior and preferences. This information can be used to tailor services and marketing strategies to better meet customer needs, enhancing personalization and improving customer engagement.

“There’s no more excuse for bad user journeys. … If I’ve had a bad payments experience with a certain rail or form of payment, then I won’t use that,” Gerhard Oosthuizen, chief technology officer at Entersekt, told PYMNTS.