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Instant B2B Payments Reshape Buyer-Supplier Dynamics

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The B2B payments landscape is uniquely large, and largely unique.

Responsible for around $125 trillion in annual volume, the B2B payments marketplace is defined by both its antiquated status quo and the fact that no two business are alike in the ways in which they prefer to transact.

But with the news that cloud solutions are coming to The Clearing House’s RTP® network, the impact of instant payment capabilities across B2B payments is top of mind for businesses looking to transform the workflows and data that make up their commercial transactions. 

Although the current environment remains a long way from anything resembling real-time payments ubiquity, the allure of real-time B2B payment solutions is becoming too significant to ignore as companies increasingly seek to optimize their financial flows. 

That’s because traditional B2B payment systems, often characterized by delays and a lack of transparency, simply don’t cut it anymore in today’s modern world. Increasingly, both buyers and suppliers are looking for something better — and newer firms are finding it hard to settle for legacy methods like paper checks, wires and even cash.

Still, there are several foundational elements that merchants, businesses and financial institutions need to implement to support the unique requirements of instant B2B payments.

That’s why the potential benefits of instant B2B payments — including improved cash flow management and reduced transaction costs — are driving a concerted effort among financial institutions and technology providers to develop scalable solutions.

Read moreThe Consumer Experience Meets Business Payments Requirements

The Digital Payments Landscape Solves For Legacy Uncertainties

Asked by PYMNTS about how real-time functionality can improve the ways in which buyers and suppliers interact in commercial settings,  Irfan Ahmad, managing director and head of U.S. payments in Global Payments Solutions at Bank of America, noted in a conversation this month (May 2) that real-time payments enable parties to agree on terms that let suppliers get paid faster while offering discounts to buyers.

“When you give the payer more control, you give them more flexibility to respond to their dynamic business needs,” Margaret Weichert, chief product officer at The Clearing House, explained during the same conversation.

As businesses become more familiar with the benefits of instant payments, their integration into B2B transactions is anticipated to become more prevalent. Particularly against today’s macro backdrop of rising interest rates and geopolitical uncertainty, a growing appetite for working capital certainty and management is pervading the marketplace, leading both buyers and suppliers to find that the value proposition of instant payments makes sense.

“What receivers want now, and payers want, is predictability,” Sezzle CEO Charlie Youakim told PYMNTS in November. “If I’m expecting a payment on the 15th of the month, I’d like to be paid on the 15th.”

According to recent PYMNTS Intelligence, more than half of middle-market CFOs interviewed said that challenges in receiving payment contribute significantly to their uncertainty. 

Leveraging real time rails for B2B payments can help turn that uncertainty into certainty. While some may view instant payments as merely another option in the array of available payment methods, experts argue that they represent a significant accelerant for innovation within the financial sector. Instant payments are not just about speed; they are about transforming the way businesses interact with each other and manage their financial operations.

Read moreBuyer-Supplier Relationships Are Being Reshaped in a Crucible of Convenience 

Instant Payments: Beyond Just Another Payment Rail

As previously reported, PYMNTS Intelligence has found that six in 10 firms use legacy methods to pay for commercial goods and services.

By providing a platform for real-time financial exchanges, instant payments are setting the stage for a new era of business transactions that prioritize efficiency, transparency, and security. As the B2B payment landscape continues to evolve, the integration of instant payments stands out as a key driver of change.

“The amount of paper that is still passed around in the B2B space continues to stun me, and it’s somewhat by choice, but more and more, I think businesses are looking for a better way,” Shawn Cunningham, managing vice president and head of Capital One Trade Credit, told PYMNTS last year.

Outside of real-time rails, other B2B payment innovations like the use of virtual cards are helping both buyers and suppliers streamline B2B payment processes.