To Have an Impact, Business Payments Innovations Must Move as Fast as Customer Needs

The business-to-business (B2B) landscape is in the midst of a pivotal migration away from legacy systems.

“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, VP and GM of B2B product, partner & client management, at American Express Global Merchant and Network Services (Amex), said in a recent discussion with PYMNTS.

Modern B2B payment solutions and platforms are delivering greater value by enhancing internal processes as well as optimizing supplier and enterprise customer relationships.

“We all know that the way businesses buy and sell to one another has historically been full of all kinds of frictions,” Lolli said.

Iceberg of Paper Checks Is Melting

One of the positive impacts of the contemporary landscape’s ongoing transition to digital, Lolli added, is that its accompanying business realities have begun to melt what he calls a “giant iceberg of paper checks” sitting in the middle of the B2B payments process.

“[Moving away from] this manual process has allowed an acceleration in electronic, digitized payments — but it’s important to highlight that while the trend is great, approximately 40% of all B2B payments are still being made via paper checks today,” he said. “As businesses continue to rely on manual processes, paper checks, and mailed invoices, a huge opportunity remains for Amex to work hard and improve B2B payments.”

Research in the PYMNTS study “Digital Payments: Changing Economy Sparks New Priorities for Systems Spending,” shows that a majority of CFOs say their investments in digital tools are paying off. More than 7 in 10 manufacturing, retail, and finance and insurance firm CFOs report seeing improvements in working capital and credit systems from recent investments in digital payments technology.

Lolli said the companies he talks to every day, particularly in the construction space, are super focused on their own customers, so he doesn’t see any resistance to the ongoing digital transformation of B2B transactions.

“There’s still a significant number of firms losing time and missing out on savings by manually managing accounts payable (AP) and accounts receivable (AR),” Lolli said. “And it isn’t all in their control either — sometimes they’re receiving manual items from their customers, or the customers might be using an automated system while the supplier is still manual, so there’s a long way to go.”

Still, he added, what’s so exciting is that the trend line for digital B2B payments is accelerating further and faster. Lolli emphasizes that he sees it happening even more so with capital-intensive businesses like construction firms and other industries, as they see the benefit and the value of the innovations already underway.

“In terms of the technical side of it, it’s not that heavy of a lift, frankly,” he said. Noting that construction businesses he works with are increasingly coming to him and asking, “How do we move faster to digital payments? How do we get a better handle on our cash flow and management?”

Realizing the ROI

“We’re all feeling the effects of the business environment, sustained high inflation, rising interest rates, and economic uncertainty, both as representatives of enterprises and as individuals. Companies are working hard to mitigate these effects, move faster on integrating digital payments, better handle cash flow management, and leverage automation in a way that provides liquidity but also gives a greater sense of transparency and lack of errors,” Lolli said. “Firms are taking a look at their back-office processes and they’re seeking new innovations to create efficiencies and cost savings.”

Businesses want providers that can handle their full AP or AR files, and that’s where partners like Amex can come in, Lolli added.

“We’re absolutely going to see businesses recognize that they can [integrate these solutions] and they’re going to get a higher return on investment by improving their processes. If you’re in a situation where your customers are automating and you’re not, you’re basically suboptimizing not just your own return but also their experience.”

As for what Lolli is looking forward to in his role as VP and GM of B2B product, partner & client management?

“We’ve set out to take the friction out of B2B payments,” he says. “We’re working really hard to build on our global multi-rail B2B network and provide a digital one-stop-shop for businesses — covering everything from reconciliation to disputes to invoicing. We want to make sure businesses can exchange information more efficiently, so they can have an overall better payment experience that ultimately grows their business.”