Report: Remote Deposit Capture Paves Path For B2B Payments Digitization

Public health and safety guidelines have forced many businesses to abandon their brick-and-mortar offices and in-person payment processes in favor of digital channels over the past year. These changes have included significant shifts in how many companies make their business-to-business (B2B) payments, with more firms moving to electronic payment methods such as automated clearing house (ACH) transfers to reduce payment frictions.

Many firms have accelerated their existing B2B payment digitization plans in recent months, adopting electronic invoices and other virtual tools as part of their accounts payable (AP) and accounts receivable (AR) processes. Fifty-nine percent of companies that still use manual AR processes plan to take them digital, for example. Yet even as firms move to optimize their AP and AR processes for a digital-first world, traditional payment methods such as paper checks are still thriving in the B2B space. Paper checks are expected to account for 45 percent of all B2B payments by the end of this year, in fact. This indicates that businesses have no plans to abandon the payment method anytime soon.

The inaugural Treasurer’s Guide To AR Payment Optimization analyzes current B2B and, to a lesser extent, consumer payment trends, including why paper checks remain an integral part of payments for a significant number of businesses. It also examines which emerging tools and technologies are playing key roles as companies digitize their AR and AP processes, even while they continue to tap paper checks.

Around The B2B Payments Optimization Space

Businesses still want to make space for paper checks, but that does not mean they are eschewing digital technologies and payment processes. One study found that 60 percent of companies are in the process of moving from manual payments toward electronic ones instead. Firms’ migration toward remote working models over the past year only intensified this need, prompting more businesses to accelerate their B2B payment optimization plans. It is clear that most businesses are prioritizing digitization as they look for lower payment processing costs or to improve settlement time, both of which were listed as key reasons to shift away from manual processes.

One major challenge that could hamper businesses’ digitization plans is that they lack the number of skilled employees to lead their innovation efforts. This can bump up processing costs and increase the time it takes to finalize payments. It takes an average of 11 hours for companies to finalize a single paper invoice, for example, and it takes 15 employees on average to complete the process. Finding ways to reduce this complexity and find skilled employees who can streamline their typical payment processes will go a long way toward helping businesses move their B2B optimization plans forward.

Businesses are also examining how they can incorporate emerging technologies into their B2B payment processes, especially as costs continue to ramp up. Small- to medium-sized businesses (SMBs) in the U.S. alone collectively spend $2.7 trillion annually on AP processes, making it critical that they find ways to decrease their expenses and make payments more seamless. This is where incorporating technologies such as artificial intelligence (AI) could come into play. These tools can ease friction points that keep costs high, which could account for the rising number of companies that report more interest in it and related technologies. Recent predictions show that global AI investment will reach $22 billion by 2025, for example, indicating that businesses expect it to take on a key role in the B2B payments world.

For more on these and other stories, visit the guide’s News & Trends.

Driving Check-Reliant Companies To Take Their First Steps Toward B2B Payment Digitization

Brick-and-mortar offices worldwide were shut down for a large portion of 2020, prompting businesses to swiftly adapt their typical payment processes and daily operations to virtual channels to keep their cash flows moving. This does not mean companies were persuaded to let go of the familiar payment tools they have used for decades, however. Paper checks have retained a special place in the B2B payments space even as firms increasingly move to remote or hybrid working models.

Check-reliant firms can also no longer ignore the need for payments innovation after the events of the past year. That is why it is critical for financial institutions (FIs) and payment partners to persuade their merchants to digitize their B2B payment processes, explained Jim Gifas, head of Treasury and Payments Services for CIT Bank.

To learn more about why many businesses continue to cling to checks and why coaxing them to digitize their payments requires taking that reliance into account, visit the guide’s Feature Story.

Deep Dive: Why Considering Paper Checks Is Key To B2B Payments Optimization

Companies worldwide are moving their tasks and payments onto digital channels and are searching for solutions that can help them optimize their payment processes for a digital-first environment. That does not mean they want to completely abandon traditional B2B payment methods such as paper checks, however. Determining how to create space for paper checks as more businesses transition to digital-first AR and AP processes is thus essential.

To learn more about why businesses are still attached to paper checks and how they can continue on their paths toward payment optimization without relinquishing them, visit the guide’s Deep Dive.

About The Guide

The Treasurer’s Guide To AR Payment Optimization, a PYMNTS and CheckAlt collaboration, examines the latest B2B and consumer payment trends and how businesses can keep pace with them. It also examines what tools and technologies are coming to play a key role in companies’ payment optimization efforts.