Payments Find a Home in ERP Systems as Back-End Processes Modernize

B2B Payments

For enterprises large and small, the back office remains a key component ripe for modernization.

And modernizing the workflows that take place, increasingly, involves payments functionality.

Recent announcements from larger enterprise resource planning (ERP) providers and payments firms herald the practice of embedding of payments functionalities into the software that client companies use to keep operations going.

Doing so means paying suppliers and reconciling transactions, too, is digitized and made easier, improving cash flows that wend their way across B2B ecosystems.

A Spate of Partnerships

Visa announced on Tuesday (March 12) that it has launched a new integration with SAP-owned working capital management solutions provider Taulia. The joint efforts bring together Visa’s digital payments technology and Taulia Virtual Cards. The payments functionalities are being integrated with SAP’s ERP offerings and business applications. The integration helps accounts payable (AP) teams automate payments to suppliers.

As noted in this space in recent months, Taulia and Mastercard have already had a similar joint effort in place.

Elsewhere, research from PYMNTS Intelligence and Galileo has found that more than 80% of banks currently offer or plan to offer clients the ability to use their own enterprise resource planning (ERP) systems to access accounts and make payments to third parties.

This past summer, HSBC and B2B commerce platform Tradeshift formed a joint venture to develop embedded finance solutions and financial services apps. The JV was part of funding round that saw HSBC invest $35 million in Tradeshift, with digital solutions embedded into Tradeshift and other platforms, including payments.

Oracle’s Netsuite said last year that it had debuted NetSuite Capital, billed as an embedded service that helps organizations improve their cash flow and reduce days sales outstanding (DSO). With that offering in place, said Netsuite, client firms accelerate payments and increase working capital by reviewing, pricing, and submitting invoices from accounts receivable “for immediate payment,” according to the company announcement.

Recent PYMNTS Intelligence data tied to the “Accounts Payable Payments as a Service” trackers revealed that embedded finance could be a multi-trillion dollar opportunity, as measured in transactions, within the next few years, and has been growing at double-digit percentage points, compounded annually. Data show that roughly two-thirds of businesses encounter delayed payments, with suppliers waiting an average of 43 days to get paid.

In another study, we found that inefficient back-end processes in AP and accounts receivable (AR) departments have led to reduced cash flow visibility for 28% of companies surveyed. Manual review of payments has been cited by nearly half of companies that say they’ve encountered friction when making B2B payments — which indicates that automated and embedded solutions are poised to see increased embrace.