Why B2B Firms Must Take The Wheel In Payment Processing Strategy

In the midst of a surge of new software solutions and FinTech platforms available to B2B companies, the enterprise resource planning (ERP) system continues to retain its reputation as the single source of truth within an organization, a sort of motherboard to connect and streamline many workflows into one.

While third-party solution providers often recognize the importance of ERP integrations, there is no single, perfect tool to eliminate friction entirely — and no single ERP can address every company’s needs in every way.

Payment processing, for instance, typically lies outside of the ERP, with third-party processors often chosen in passive fashion, according to SYSPRO Vice President Alliances Sanjay Ejantkar.

Speaking with PYMNTS, Ejantkar explained why smaller and mid-sized B2B companies must get proactive about their payment processing strategies — including choosing which technologies they use and which payment methods they accept — rather than take a back-seat approach to navigating a modernizing B2B payments landscape.

A Passive Approach

When it comes to choosing a payments processor, many B2B companies will simply take the first opportunity that comes their way, according to Ejantkar.

“In terms of how a customer is tied to a process, it’s very opportunistic,” he said, noting that organizations may pick whichever processor cold-calls them, or whichever processor an industry peer uses. This unfortunately leads to many gaps in service and capabilities, particularly when it comes to addressing the unique — and often complex — needs of the B2B space.

Integration into the ERP, for example, isn’t a guarantee, and even when that connection can be made, other lapses in functionality often make payment processing extra painful for manufacturers and other B2B firms.

“A lot of payment processors don’t understand the ERP space, or the complexities of a B2B transaction,” he continued, highlighting the need for not only data integration, but tokenization and other security measures, as well as the ability to address many of the most challenging B2B payment scenarios like recurring billing, deposits, payment terms, trade promotions and more.

A Commercial Card Strategy

When it comes to commercial card processing specifically, payment processors aren’t always going to offer Level II and III data capture, either, a vital component that lowers interchange fees for suppliers, removing one of the biggest barriers for card acceptance in B2B trade.

Although corporate buyers have driven up adoption of the commercial card, Ejantkar explained that again, there is an “opportunistic” approach to card acceptance.

“It’s companies sitting there thinking, ‘I need to start accepting credit cards now,'” he said. “And there’s still the mentality that they have to surcharge their customer because of the extra [interchange] cost.”

This is a scenario in which a more active payment processing strategy could open up B2B organizations’ eyes to the potential value of card acceptance, with Level II and III processing offering firms the chance to accept cards without an added cost for their buyers and recognize the potential strategic value in card acceptance, like accelerated payments.

Navigating B2B Payments Evolution

To address many of these friction points firms face when passively selecting a payment processor, SYSPRO recently announced integrated card processing capabilities within its ERP. According to Ejantkar, the company is also developing capabilities to augment its existing ACH processing functionality through ERP integration, too.

As B2B payments modernize and digitize, integration of transaction data within the ERP will be vital for organizations who continue to rely on their systems as a single source of truth within the enterprise. Ejantkar noted that such data connectivity also supports automation of many complex processes, for instance the management of those recurring payments or trade promotions, freeing time up for professionals to focus on more value-added initiatives.

And while cards continue to account for a smaller fraction of overall B2B payments volume, he also noted that card acceptance will become increasingly important for organizations that are shortening their supply chains and approaching a direct-to-consumer model in which card acceptance is a customer requirement.

As the ecosystem evolves, Ejantkar said it will be increasingly important for B2B firms to no longer take a back-seat approach to their payment processing strategies, and instead take the wheel to ensure processing workflows not only meet customer needs, but actually add value to the enterprise.