Automated B2B Payments Leave Legacy Processes in the Dust

Within today’s digital world, B2B payment mechanisms are increasingly finding themselves at an inflection point.

Digitization is frequently a one-way street. Firms that have successfully undertaken a modernization of their B2B payments functions are unlikely to turn back the clock and re-embrace legacy methods like cash, checks or wires.

“B2B payments haven’t evolved much from the modalities that dominated the landscape 40 or even 50 years ago,” Boost Payment Solutions Chief Operating Officer Illya Shell told PYMNTS for the series “What’s Next in Payments: Payments Modernization.”

It’s only now, nearly a quarter of a century into the 21st century, that this status quo of firms being mired in antiquated processes is undergoing a seismic shift toward more streamlined, digital and automated payment solutions.

“Traditionally, payments were an afterthought,” Shell explained. “But modernizing global B2B payments is an enormous opportunity.”

Shell said he envisions a landscape where globalization, cost-sharing models and tokenization of payment products will redefine the future contours of B2B payments by ensuring the payments themselves are done efficiently, effectively and at the lowest cost possible.

But to get there, businesses across both sides of the B2B transaction will need to fully embrace payments modernization — and soon.

Navigating the Landscape of B2B Digital Transformation

A pivotal aspect of undertaking a B2B payments modernization journey involves prioritizing transparency, optionality and improved economics for all stakeholders involved in the payment ecosystem. As Shell noted, savvy players in the market will be those who can rapidly adapt and innovate to meet the evolving needs of customers and help propel the industry into a new era of efficiency and collaboration.

“The market is young … at this point, only a small percentage of B2B payment flows have been digitized or optimized,” he said. “Much of what’s left is really hampered by rigid and inflexible systems.”

But as the young market matures, and digital solutions continue to gain share relative to traditional B2B payment modalities, Boost has used cloud infrastructure and strategic partnerships to scale its own payment capabilities as it looks to cater to a growing global customer base, rolling out innovative buyer tools such as the Boost 100 program, which empowers enterprise and middle-market buyers to optimize their payment processes effectively.

“As shared payment models evolve, in the B2B world specifically, and the costs and benefits are distributed across stakeholders — Boost’s infrastructure has been enhanced and constructed to support these use cases that require greater flexibility and collaboration between buyers and suppliers,” Shell said.

“The payments modernization winners will be the ones that can rapidly adjust and evolve to meet the needs of their customers,” he added.

In the era of digital transformation, data analytics and customer insights have also become indispensable tools for optimizing payment processes.

“Data and insights are at the heart of everything,” Shell said. “Data is paramount to our customers, and as it relates to their B2B transactions specifically.”

He noted that businesses look to Boost to receive and decipher the payment information that they send, and then to provide data back to them in a format and via a delivery method that works best for them.

“We harness the power of technology to gather, organize and present data in a way that’s actionable for our clients and to our partners,” Shell said.

Embracing the Journey Toward B2B Payments Modernization

Despite the potential benefits, there exist ongoing and formidable challenges to modernization within B2B payments.

For one, inertia and entrenched legacy systems pose hurdles to the widespread adoption of digital payment solutions. Overcoming these challenges requires a concerted effort to deliver tangible benefits in terms of time and cost savings for customers, Shell said.

“The inflexibility of traditional systems and platforms have prevented lots of companies from moving forward and keeping up with the changing dynamics of the large B2B buyer-supplier relationships,” he said. “We’ve spent the past 15 years focused on converting manual tasks into automated ones to help our customers understand the value of payments modernization.”

Looking ahead, Shell explained that he sees a “paradigm shift” toward cost sharing between buyers and suppliers taking place across B2B payments based on who gets more of the benefit of a given transaction, noting that pricing in the commercial card industry hasn’t changed much over the years.

Also, he pointed out that “globalization of the B2B payments landscape” is a big upcoming theme.

“Unfettered money movement across geographies with complete transparency and competitive economics will change the market as we know it,” Shell said. “It’ll open up trading corridors and make it easy to establish relationships with counterparties that are no longer just within your home country.”

Finally, all the advances being driven by B2B payments modernization will rest on flexible, agile and digital solutions.

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