Too Many Industry Sectors Operate in Payments ‘Dark Ages’

The last two years may have exposed flaws in the way businesses conduct cross-border commerce, but there’s always room for improvement.

In a recent conversation with PYMNTS, Boost Payment Solutions founder and CEO Dean Leavitt drove the fact home. Some businesses have embraced change more rapidly than others, and he identified 10 to 15 verticals that are ripe for digital migration in the cross-border payments space. Notable ones include media, healthcare, telecom, freight and logistics, manufacturing and construction.

“A lot of the industries that I’ve identified are in the Dark Ages when it comes to the data exchange, the way in which remittance detail is exchanged among all the stakeholders,” he said.

See also: Digital B2B Payment Solutions Provide Flexibility for Buyers and Sellers

Enterprise-level B2B transactions involve tens of millions of dollars, and thousands of invoices, each with hundreds or thousands of rows of line item detail, so it’s imperative that when you make these payments you deliver that data to the stakeholders in ways they can ingest it into their system and eliminate the human factor, Leavitt said.

Driving Forces

To start shedding some light on the problem, he said, businesses need to start by recognizing two major industry trends.

The first is working capital issues on both the buy side and the supply side. He said implementing a commercial credit card product can increase days payable outstanding while at the same time reducing days sales outstanding, which is a real win-win.

The second has to do with data.

“By introducing digital payments, not only do you get the benefit in the case of the working capital benefit,” he said, “but you can also send along with that transaction an unlimited amount of data in a host of different formats and delivery protocols so that the stakeholders, the buyers or the suppliers, can receive that remittance detail and ingest it automatically into their accounting system or [enterprise resource planning (ERP)].”

Pandemic Still Teaching

Leavitt says the state of play in B2B payments has been affected by macro trends in many ways. International commerce, always huge, became even more monumental coming out of the pandemic. During the pandemic, supply chain issues amplified cross-border trade. What went with that was the need for payments and, equally important, the data exchange among all the stakeholders.

“So, the focus on how money travels from business to business is just mission critical for all organizations from the largest enterprises to the smaller businesses,” Leavitt said. “It’s on everybody’s mind, and we’re maniacally focused on that community.”

And how far cross-border payments have bounced back depends on where you look, he added.

“Travel and entertainment went down to near zero for so long during the pandemic, yet B2B transactions either held their own or in certain areas skyrocketed, he said. “Many other B2B transactions are driven by consumer transactions. So when everybody went into their bunkers and started buying everything online, that spurred a huge amount of B2B transactions.”

“Other areas of B2B were impacted by supply chain issues,” Leavitt said. “So certainly, certain aspects of B2B took a very significant hit. But it has largely been very resilient.”

A Catalyst for Digital Payments

According to Leavitt, the pandemic was a catalyst for a lot of organizations that hadn’t focused on digitized payments to get in the game. Those laggards that had just not prioritized it had to jump in because they weren’t able to go to the office and write a check or open mail and deposit a check.

“Certainly, as it relates to digital B2B payments, including commercial card rails, which we focus heavily on, there’s been a very significant increase in certain sectors of B2B spend,” he said.

Significant growth is concentrated in several of the 47 countries where Boost does business. Outside of the United States, various regions are at different states and stages of their adoption of digital payments.

“Western Europe, the U.K., Brazil, Australia, Canada, these are regions where a lot of their migration toward digitization is beginning to hit on all cylinders,” Leavitt said. “So certainly, geographically we’re seeing a lot of areas that were late to the game that are somewhat embryonic, even in their migration from be it check, wire or ACH over to the commercial card rails. We’re beginning to see some significant growth across those regions.”

Barriers to Card Adoption

According to Leavitt, the U.S. is far more advanced in the adoption of commercial credit cards for B2B commerce than the rest of the world, but he said he remembers that wasn’t always the case.

“I remember when I started Boost 14 years ago, introducing the concept of making multimillion-dollar payments by corporates to their suppliers using a card product,” he said. “People laughed at me because cards were only used for smaller transactions and [travel and expenses].”

They’re not laughing anymore.

Read more: Card Acceptance Can Improve Cash Flow for Buyers and Sellers