The Buyer’s Inescapable Presence In AR

When providing an accounts receivable (AR) solution, it’s not only the customer — the supplier or vendor — that you have to keep in mind. It’s the customer’s own customers — the buyers — who need to work with an AR solution, too. But in B2B payments, the needs of supplier and buyer are sometimes at odds.

For instance, a corporate buyer may need a way to make customized payments or want to pay via card. If a supplier’s AR and payment solution can’t support those demands, there will inevitably be friction.

Accounts receivable company Paymetric is currently positioned in front of its own customers’ clients, thanks to the recent release of BillPay. That means Paymetric now not only has to think about its customers’ AR needs, but also support the demands of end-buyers – which is easier said than done.

“This is an evolution for our business,” said Chris Adams, Paymetric director of product management, in a recent discussion with PYMNTS about the new BillPay tool. “We’re going from being behind-the-scenes to becoming more buyer-facing in this B2B relationship.”

But as an AR company, Paymetric’s initial focus is on the supplier, and getting paid for them can be a “headache,” Adams said. One of the most obvious challenges suppliers face is getting paid faster, but the overhead associated with manual and legacy AR processes is also a major point of friction of these businesses.

“”If you’re sending out hundreds of thousands of invoices, you’re maybe spending half a million dollars just mailing out paper invoices,” he said. “Then you’ve got the process of taking those payments. You may be employing one or two people just to receive invoice payments in the mail.”

At an average of, say, 10 minutes to process each payment mailed in, that’s a lot of man-hours and a lot of money spent just to get paid.

PCI compliance is also a monster of an obstacle when suppliers manually accept payment, he noted. Those regulations demand stringent processing and storage of card information, but if a company is receiving card information over the phone, a company  can quickly run into the dangerous waters of noncompliance.

An automated, cloud-based accounts receivable solution can solve for all of these issues and overall supports faster payment of supplier invoices, Adams said. For instance, if a buyer wants to pay at 2 a.m. when a call center isn’t open to receive payment, a supplier can still get paid — but only if that AR solution offers a platform that can meet the buyer’s demands, too.

A demo of the BillPay solution presented to PYMNTS revealed a single interface through which onboarded buyers can pay outstanding invoices via a card or an eCheck. Adams said its design was developed to make it as easy as possible for a buyer to pay a supplier, thus supporting faster invoice settlement and healthier cash flow for the vendor.

But there are times when a buyer’s needs are in conflict with a supplier’s. Take card payments, for instance.

“Our merchants are always looking at finding ways to reduce their processing costs,” Adams explained, noting that accepting card payments, considering the interchange fees, can be a struggle, especially when dealing with SMEs.

“A lot of times a small business will want to pay by credit because they need to,” he said. That means SME buyers’ own cash flow challenges could spill out onto its suppliers, which often have to choose between accepting cards at a cost or waiting later to get paid.

Offering Level 3 processing, which can reduce those fees as well as choice in payment rails for the buyer, are two ways that he said can help find common ground between buyer-supplier payment preferences. Still, this is often a daily challenge for suppliers.

“I think that, overall, suppliers are having to make decisions on whether or not they want to extend out credit [to their buyers] and take on that risk,” Adams noted. “It’s part of the reality of a B2B transaction. Our merchants are having difficulty getting paid, because they’re dealing with SMBs that are having trouble paying bills …. Our overall view on that is that the more ways we provide the small business to pay our merchants, the more likely they are to get paid.”

With that in mind, Adams said Paymetric is gearing up to add new solutions, some of which are in response to its newfound position in front of the buyer and others that are in line with its supplier-servicing efforts. For instance, Adams said the company may look to begin offering invoice financing on unpaid invoices, either by partnering with another lender or developing a solution internally. The executive also said an accounts payable solution may also be ahead in the firm’s product roadmap. Supporting features like real-time ACH payment and partial payment capabilities, too, can not only meet needs of buyers, but also ultimately help the supplier to get cash on the books.

The launch of BillPay, he said, is just “the first step towards creating a better relationship with the buyer” and one that supports its own merchant customers in their journey toward an omnichannel, seamless payment acceptance offering.