Report: FIs Use Technology to Fix B2B Invoicing, Cash Flow Frictions

Businesses face many of the same challenges that consumers do regarding their money: slow and complex payments processes hinder their ability to manage their finances. Financial institutions (FIs) have attempted to address the frictions their business clients face by adopting new technologies, yet just a minority believe that their efforts are actually working, according to recent PYMNTS data.

That’s a problem for FIs and corporates, as business clients see payments friction as a customer experience issue, and FIs’ efforts can be costly when new payments technologies fail to deliver strong return on investment. For many FIs, payments modernization hasn’t been enough to solve their clients’ biggest financial management and payment challenges. That’s why many FIs are changing how they look at technology and seeking specific technical solutions for their clients’ biggest pain points.

The New User Experience: Tracking The Consumerization Of B2B Payments, a PYMNTS and FIS collaboration, looks at why many FIs and corporations are now seeking to consumerize business-to-business (B2B) payments by offering simple, secure and convenient tools to facilitate and manage transactions. The report is based on a survey of 311 executives from FIs with assets of at least $500 million or more that serve clients with revenues ranging from less than $20 million to more than $1 billion annually. Executives were asked about the challenges their corporate clients face in managing payments and finances, and about their plans to limit friction in payments processes.

According to the report, technology adoption is many FIs’ go-to strategy for improving customer experience for corporate clients. FIs have made several efforts to meet clients’ ever-increasing needs for fast, secure and seamless B2B transactions in the past year, and they often have attempted to create their own digital solutions to remove payments friction. Automated account validation and digital lockboxes are the most common digital solutions FIs offer their corporate clients to reduce B2B payments frictions.

Most FIs understand that seamless payments are critical for their business clients’ success, and are actively trying to improve their payments experiences. Sixty-six percent of FIs say the ability to offer clients B2B digital payments solutions is “very” or “extremely” important, yet just 30% say their current solutions are “very” or “extremely” effective in addressing B2B payments frictions.

Other key findings include:

Forty-two percent cite invoice reconciliation complexity as an important source of friction for corporate clients paying suppliers. The inability to manage invoicing can contribute to payments delays and poor customer experiences for suppliers and corporates.

There is a gap between the digital features offered by FIs with large business clients and those serving smaller businesses. Ninety-five percent of FIs with large business clients offer digital lockboxes, for example, and 74% of FIs with small business clients offer them.

Most FIs do not have the human resources to develop in-house solutions to address payments frictions. Just 37% of FIs say they are equipped to create technical solutions for their clients’ payments frictions.

To learn more on why many FIs and corporations are now seeking to consumerize B2B payments, download the report.