Fragmented B2B Payment Flows Leave Some Corporates Wanting ‘More Structured’ Solution

B2B payments are steadily becoming more digital, with 80% of all B2B interactions projected to take place digitally by 2025. But for many companies, both established and startups, the struggle to optimize and streamline their back-office functions can’t end soon enough.

Nancy Korayim, CEO of last-mile delivery company MetroSpeedy, told PYMNTS she is actively looking for ways to digitize how the company manages B2B relationships, but as of now still processes receivables and payables using a variety of payment systems depending on a particular partner’s needs.

Like many small- to medium-sized businesses (SMBs), MetroSpeedy primarily receives payments from clients via credit card, automated clearing house (ACH) and check; and when paying its own vendors, Korayim said the company primarily uses credit cards, ACH, wire transfers or financial service apps, a recent addition that further complicates the payments process.

“Ideally, we would like to have a uniform way to approach all transactions in a more structured way, especially with an increase in online and global transactions,” she said.

The Slow March

MetroSpeedy is not alone in this desire as over 80% of firms pay each other using paper checks, PYMNTS research has found, while 64% use ACH, and less than half of businesses make payments via credit card, in part because of interchange fees that can rapidly add up in B2B transactions.

See also: A B2C Merchant’s Guide to the B2B Ecosystem

In addition to providing its own delivery services to businesses, MetroSpeedy also runs a Software-as-a-Service (SaaS) platform that provides delivery management services for other firms that have their own fleets and delivery people. It also operates an advertising business, which primarily puts ads on MetroSpeedy’s own vehicles and cargo boxes.

“We’re not your typical last-mile delivery company, that’s for sure,” Korayim said.

Over the last 18 months, MetroSpeedy has seen a 150% increase in demand for its delivery services, which Korayim said is exciting but adds to the pressure to find cost-effective ways of doing business, particularly because of the dynamics of last-mile delivery. Korayim said about half of all delivery costs occur in the last mile, and both consumers and companies are increasing their demands for faster service.

Whether it’s payments, invoicing or going to final mile, this New York-based startup is always pursuing ways to reduce costs and increase efficiency.

“We have to be a step ahead,” she said.

Read also: 50% of Delivery Costs Occur in Last Mile, Putting Pressure on Transport Providers

Building Up Technology

MetroSpeedy’s clients range from startups to enterprise level, Korayim said. The company’s billing is done via a proprietary invoicing platform while collecting happens via its financial platform.

“As a tech-based company, technology plays a big role in our day to day,” she said, noting that forging the right partnerships with scalable platforms “is a critical play for any company.”

“Of course, we focus on building proprietary tech within before we outsource,” she added. “However, when we do outsource, we spend a ton of time researching and demoing tech stacks to find the best fit.”

PYMNTS research, in collaboration with American Express, found that 87% of firms realized faster processing speeds when automated technology was adopted, and 72% saved on operational costs.

See more: AR Automation Makes or Breaks Firms’ Collection Cycles

Business sectors such as advertising and energy that are further along in adopting technology enjoy smoother collections environments. Energy firms, 71% of which use automated collection processes, take 12 days to follow up on collections; whereas construction companies, only 48% of which use technology to prioritize collections, take 22 days, 24% higher than average.

In comparison, 65% of tech firms prioritize automated collections, with the industry on average taking 19 days to follow up.