Real-Time Money Movement Creates Competitive Advantage for Buyers

In today’s fast-paced world, where capital is king, money needs to move faster than ever.

This is particularly true across business-to-business (B2B) transactions, where the way that organizations get paid, and when those transactions are settled, is crucial not just to growth today, but success tomorrow.

The May 2023 edition of “The Real-Time Payments World Map,” a PYMNTS collaboration with The Clearing House, finds that many nations in critical commercial corridors around the globe, including countries like Mexico, Kenya and Malaysia, are set to double or more than triple their average daily volume of real-time payments over the next three years.

Mexico alone is expected to grow its the daily volume of real-time transactions to more than 5 billion by 2026.

This phase-shift, driven in part by the growing consumerization of enterprise expectations and sweeping operational evolutions, will have a far-reaching impact across cross-border B2B ecosystems.

See also: Navigating Cross-Border’s Unstoppable Rise and Enormous Complexity

Businesses hoping to compete and grow globally are coming to realize that they need to support a broad range of payment capabilities, and increasingly looking to modernize their accounts payable (AP) and accounts receivable (AR) systems, among other processes, in order to effectively and sustainably do so.

That’s because to take advantage of real-time payments, organizations need to be fully equipped to accept and send them to and from their vendors and partners.

PYMNTS research in “The One-Stop Bill Pay Playbook” finds that confusing payment interfaces for payors and missing features for payees are among the top complaints of B2B transactions.

Dean Henry, EVP of global business financing, payments and digital experiences at American Express (Amex), told PYMNTS last week (May 4) he believes that in the near future, “around 4 in every 5 B2B transactions will be supported by software platforms.”

B2B Payment Landscape Changing Fast

Speed to revenue and speed to cash flow is rapidly emerging as a key competitive differentiator defining next generation enterprise B2B relationships, particularly ones taking place across borders.

The ongoing macro challenges affecting today’s operating landscape, including higher cost of credit, historic inflation, and rising interest rates, have organizations looking for any competitive edge they can find.

Often, that edge can be optimally realized by identifying and removing legacy frictions along the payments journey.

After all, efficiency is key to success, and fundamental to building better B2B relationships.

International payments, in particular, are often slow, complicated, and expensive. Each step in the process presents another opportunity for friction, delays and frustration, from purchase to routing, verification, fulfilment and settlement — highlighting the room that exists for process improvement making B2B relationships easier and more seamless for both buyers and sellers.

Nine in ten small and-medium-sized business (SMB) owners (90%) tell PYMNTS that modern payment platforms for B2B transactions save time and are more convenient.

That’s because legacy methods, frequently powered by aging tech infrastructure which leaves businesses vulnerable to their own accounting systems’ pitfalls, can increasingly lead to ongoing compatibility frictions in ways that may potentially create relationship-damaging vendor frustrations.

Next Generation Challenges

The rising importance of speed and convenience within today’s increasingly digital world brings with it a host of future-fit pitfalls, including new varieties of fraud and modern vulnerabilities for businesses to be aware of and proactive in defending.

The latest 2023 PYMNTS data shows that fighting fraud in real-time payments can be best accomplished by a mix of technology and education.

Advances in innovative tools like artificial intelligence (AI) can support secure transactions by leveraging data in real-time to validate and authenticate settlements without creating unnecessary frictions or extra steps for B2B customers.

“B2B networks are starting to catch up to the consumer experience,” Amex’s Henry said to PYMNTS, explaining that automation is helping solve many of the historical frictions at the “heart” of payment problems by allowing buyers and sellers to “share data and automate error discovery” between purchase orders and invoices, driving “incredible efficiencies” for the businesses implementing them.

In another conversation last week (May 5), Fredrick “Fritz” Smith, CRO of end-to-end AP/AR procurement solutions company Corcentric, told PYMNTS that while “within B2B ecosystems there are always frictions. … The world is changing very fast relative to the way in which digital payment strategies can be incorporated and their ROI (return on investment) realized.”

PYMNTS research shows that more than 9 in 10 companies (94%) are investing in digital technologies in at least one area of payments and finance, with a similar percentage (87%) planning to invest in the future.

New needs and emergent market realities are a driving force behind the evolution of payment methods and the sunsetting of legacy systems, helping bring cross-border commerce into an increasingly connected and secure world.