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Toward 2030: How Data-Rich Environments Can Benefit B2B Payments

financial data, b2b payments, digital payments

How a business is paid has an upstream impact on the overall B2B relationship. 

That’s why firms can gain a competitive edge by offering cutting-edge services, particularly around the B2B payments journey. 

With paper checks still tied to 40% of commercial transactions, and other B2B payment processes like wire transfers, ACH payments, trade credit and cash payments often characterized by delays and complexities, providing seamless payment optionality and a more convenient experience can go a long way toward building a productive working relationship. 

The modern business ecosystem demands flexibility. Today, data, analytics and advanced technologies are poised to converge and reshape the landscape of B2B financial transactions. 

The driving force behind this new era is the simple and unavoidable fact that digital payments provide a host of benefits that are simply not possible when firms rely on legacy methods.

Foremost among these benefits is that electronic payments turn the B2B payment occasion into a data-rich environment — one that can be plumbed for insights, used to boost fraud defenses, and innovated atop of for efficiency, transparency and convenience. 

Read more: Middle Market CFOs Say Automated AP/AR Delivers Certainty in Tough Economy

The Benefits of Data-Rich Payment Environments

Businesses may be slow to embrace digital payments if they do not fully comprehend the advantages and how to leverage them effectively, and, as previously reported, PYMNTS Intelligence has found that six in 10 firms use legacy methods to pay for commercial goods and services.

But the influence of data-rich environments on payments innovation cannot be overstated. We live and operate within an increasingly interconnected world, where businesses function within complex networks, collaborating with partners, suppliers and customers globally. 

“The market changes over the past few years have really accelerated the adoption of digitized B2B payments, which in turn has accelerated the innovation in the industry,” Chris Lolli, vice president and general manager of B2B product, partner and client management, at American Express, told PYMNTS.

The flow of B2B payments across these networks is critical for business growth, and data-driven insights, technology and collaboration are all necessary for accelerating the seamless and secure transfer of commercial funds. 

“On the technology side, if you’re in a place now where your in-house system looks like it did 20 or 30 years ago, this is a chance to make a huge leap forward,” Ben Lamm, chief operating officer at Capital One Trade Credit, told PYMNTS in August. 

That’s because modernizing payments infrastructure provides more benefits than ever. Tools like predictive analytics, driven by vast amounts of real-time payments data, will empower businesses to make informed decisions. Artificial intelligence (AI) algorithms can tap this data to analyze trends, identify risks and optimize payment strategies, marking a shift towards smarter and more agile financial choices. 

“Businesses are becoming much more aware and much more savvy about how to operate digitally,” James Butland, U.K. managing director at Mangopay, told PYMNTS on Tuesday (Jan. 23), explaining that handling B2B payments offline comes with “a lot of admin, a lot of costs and time lost.”

Read more2024 Is the Year Businesses Put Technical Debt to Bed 

Automating Away Entrenched Manual Inefficiencies

The days of manual and time-consuming invoice processing are declining. Data-rich B2B payment environments can help usher in automated end-to-end invoice processing. Today’s machine learning algorithms are able to extract information, match it with relevant data and automatically route invoices for approval in real-time. This automation promises not only efficiency gains but also a reduction in errors.

Still, the initial costs of a process modernization initiative can be a barrier for smaller businesses or those with limited resources, slowing down the adoption of digital solutions. PYMNTS Intelligence found that 36% of small- to medium-sized businesses (SMBs) cite both cost and complexity as barriers to automating their accounts payable and accounts receivable workflows.

But the benefits of electronic B2B payments beckon, and the costs of implementation are trending down as technology scales and becomes more accessible. 

“Companies are being pushed to innovate,” Enigma Technologies CEO Hicham Oudghiri told PYMNTS in November. “They have the technologies they need to innovate, and they have a lot more market adoption when they do innovate.”

Importantly, data-rich environments can fortify B2B payments against fraud with advanced analytics and machine learning. These technologies can detect anomalies and patterns indicative of fraudulent activities, ensuring the integrity and security of transactions. Multi-layered security measures will become more sophisticated, providing robust protection against evolving threats — something that certainly can’t be said for the paper check. 

Data-rich environments will also help facilitate the automation of regulatory compliance in B2B payments. AI-powered tools can ensure that transactions adhere to evolving regulations, reducing the risk of non-compliance and associated penalties. This automation can provide businesses with confidence in their adherence to regulatory standards. 

But one of the most attractive elements of transitioning B2B payments into digital is the ability for seamless collaboration between network players, something that is at the core of data-rich B2B payment ecosystems. Businesses, banks and other stakeholders will be interconnected, fostering real-time data sharing, efficient communication and teamwork. This interconnectedness promises to break down silos and enhance the overall efficiency of B2B transactions.

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