Integrated B2B Payments Put Digital Future in Hands of Small Businesses

It can be challenging to think of two things more at odds with each other than the mechanics of B2B payments, and the emerging expectations of modern businesses around payment simplicity, security and speed.

While consumer payments have undergone a digital transformation fueled by virtual cards, real-time payments and mobile wallets, B2B still finds itself deeply entrenched in manual processes and legacy systems.

“There’s the thought for a lot of companies that, ‘Oh, I have a purchasing card program, I have a virtual payables program — but I can’t use it where I would like to,’” Court Toomey, head of commercial payments, payables at Priority, told PYMNTS.

“Less than 10% of total B2B volume in the U.S. can be transacted via credit card, and less than 3% globally,” Toomey added, noting that across the United States, traditional B2B payments remain under-optimized.

That, however, is beginning to change.

Modern B2B payment solutions like virtual cards and real-time payments are increasingly being targeted to a growing and important small- to medium-sized business (SMB) audience.

“The more you move down-market is where a lot of the efficiencies that virtual card and real-time payments bring to B2B payments are needed,” Toomey said, adding that the idea that digital B2B payment solutions are only suited for large enterprises with massive teams and complex infrastructures was “the opposite of who should be looking at these solutions.”

“These aren’t one-size-fits-all payment innovations,” he said. “There is a size that fits everyone.”

Integrated Payables Emerge as the Silent Disruptor

At the end of the day, what does modernization look like in practice? Increasingly, it resembles something along the lines of integrated payables, or platforms designed to streamline all payment types (ACH, check, wire, card) through a single, consolidated system.

While the term might sound like something only the Fortune 500 should care about, Toomey said small teams should be first in line. For small firms or teams overwhelmed with manual processes, integrated payables can unlock cost savings and operational efficiency.

“We’ve seen the adoption now of quote-unquote virtual cards or single-use accounts … and there’s no reason that every business on the B2B side should not be at least exploring the concept of a virtual payables program,” Toomey said.

“Most of the AP teams these days, they’re dwindling in size,” he added. “There’s more on their plate. The more you can do to alleviate what those roles are, the more time can be focused on other projects or expansion.”

As macroeconomic conditions remain volatile and cost optimization is critical, integrated payables are being embraced as a strategic lever.

“There are still a lot of unknowns in this current trade environment,” Toomey said. “Integrated B2B solutions can give companies the tools they need to preserve cash and optimize cash flow to help fend off surprises … I’ve yet to encounter a single client that hasn’t realized the benefits on the procurement side from an efficiency perspective.”

What B2B Innovation Success Looks Like

For chief financial officers, controllers and procurement leads, not only has the cost calculus around digitizing B2B payments changed but so has the return on investment.

Toomey pointed to a mix of hard and soft key performance indicators, including cost reduction, reduced headcount and faster procurement cycles. Often, the most telling indicator is retrospective regret.

“We’ve had clients for years put off implementing a virtual payables solution,” he said. “And once they do it, they quickly say, ‘Why didn’t I do this 10 years ago?’ … There is no reason that folks should not be adopting real-time payments if they have the ability to do so.”

Still, education remains a hurdle.

“The biggest myth is that these are products or solutions for much larger enterprises,” Toomey said. “Banks or financial institutions should be focusing more time and effort on promoting these products more down-market.”

The stakes are high. With increasingly lean finance and procurement departments, businesses cannot afford the drag of outdated systems. As the economy tilts unpredictably, companies must invest in the infrastructure that will help them weather the storms ahead not just by surviving, but by scaling.

For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.