Accounts Payable Moves From Cost Center to Revenue Generator

The paper check remains firmly entrenched in B2B payments in the United States.

Finexio Chief Commercial Officer Bill Fox recounted to PYMNTS that elsewhere around the world — especially in Europe — checks are not part of the equation when it comes to commercial transactions. Government mandates decree that invoicing and payments must be electronic, and those activities must be fully transitioned to digital channels in the next year or two.

In the U.S., $24 trillion in B2B payments are made annually, and roughly half of those transactions are done by check, he said. Paying by check remains a key component of accounts payable activities, and AP processes are manual and vulnerable to fraud. And the sheer volume of attacks on companies is rising, with check fraud, in particular, nearly doubling from recent levels.

So, why do businesses pay their vendors by paper means?

“It’s a bit of a mystery,” Fox told PYMNTS.

A Mindset Shift Needs Education

Dig a little deeper and there’s a mindset shift that needs to help spur businesses to re-examine their back-office processes to move beyond the paper check.

There’s education needed to help these companies understand how automating their AP processes, and in particular, payments, can be a benefit to the business. There are some misconceptions about what it takes to reach that level of modernization, noted Fox.

“The perception is that companies need to bring in a whole new enterprise resource planning (ERP) system or will have to change their database — that it’s a massive infrastructure play that will take months or years … and drain resources,” said Fox.

But the reality is that providers of AP Payments as a Service, Finexio among them, can streamline payments automation faster.

In the drive to modernize AP, he said, “payments should come first.” That approach can pay dividends, as it reduces the attack vectors and vulnerabilities where bad actors might be able to disrupt operations or divert payments for their own ill-gotten gains. One key line of defense against fraud is to embrace virtual cards, which allow for transparency and greater control over spending.

AP Payments as a Service also lets firms outsource their security and compliance functions, added Fox.

“This is a conversation that I have with many business leaders,” he said, adding that “they are in the business of building things, manufacturing things … [Finexio is] in the business of keeping up with all those regulations, understanding when laws change” at the federal and state levels and what might be coming down the road with artificial intelligence (AI) and other advanced technologies.

He said Finexio is harnessing AI to “segment” the vendor population, armed with data and information on different verticals and industries, to see who might be likely to consider virtual cards, thus fine-tuning the efforts of its supplier enablement team.

Elsewhere, in bolstering client firms’ cybersecurity defenses, “We’re making sure that we are always compliant with regulations as they change — and sometimes before they change,” he told PYMNTS.

The positive ripple effect is that once enterprises have that education under their belt and have shifted the ways in which they move money — offering more payments choices to their vendors — “there are the opportunities to create revenue share opportunities, time savings and cost savings,” he said, as the interchange fees garnered by the payment providers are in turn partially “shared” with the enterprises.

In addition, he said, “you might actually improve those vendor relationships.”

The first step, Fox said, lies with AP payments digitization and “overcoming the mindset of ‘this is the way we’ve always done it’ and the misconceptions about how hard it’s going to be.”

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