Macro Challenges Drive More Business to Full-Blown Payments Automation

In payments, change is slow, and then it happens quickly.

That’s especially true in business-to-business (B2B) payments, where “the check is in the mail” gives way to the invoices sent by email, which then gives way to the embedded payment options that link accounts payable (AP) and accounts receivable (AR) departments — and buyers and sellers — in automatic fashion.

However, the road toward digitization is anything but straight and narrow.

The past few years have seen the great digital shift meet inflation, and financial professionals, in at least some cases, have had to slow down their digitization initiatives — with some even having to put them on hold.

In an interview with Visa Business Solutions Vice President, North American products Leigh Radtke, a treasurer, a CFO and two CEOs said many companies, including their own, have been refocusing their efforts to bring business payables more fully into the 21st century.

The panelists included Branch CFO Brian Whalen, Zumiez Treasurer Graham Merrill, YellowHeart founder and CEO Josh Katz and Routable co-founder and CEO Omri Mor.

As Merrill noted in pointing toward an overarching trend, “At the end of the day … we’re seeing a transformation of AP from more of a processing function to a customer service, and analysis, function within a company.”

Related: How to Eliminate ‘PDF Fatigue’ When Processing B2B Payouts

To get there, he said, Zumiez itself has had to embrace application programming interfaces (APIs) and automate invoicing.

In some corners of the B2B payments ecosystem, the urgency to get people paid more quickly is palpable. Whalen noted that for Branch, a workforce payments platform, “All workers have been facing a cash crunch — gig workers in particular.”

Given high fuel prices recently, simply getting to and from jobs (or, of course, operating as a delivery or ride-hailing professional) or Point A to Point B can be a significant cash outlay. The platform model, he said, can help workers get paid on demand, and instant digital tips can be a cash flow boost.

Increasingly, customers are realizing that there’s a benefit in focusing on their core competencies, while outsourcing payments functions to providers with the relevant expertise (and technology) on hand.

That outsourcing, Whalen added, eliminates the lumpiness of automated clearinghouse and biweekly payroll, leading to more predictable and consistent cash flow.

A Fast Acceleration

In fact, as he recounted, the demand for digital payouts to employees and contractors is accelerating at a pace not seen in decades.

As for the technologies themselves, regardless of payments scenario — and across the board in B2B — the huge wave of macro pressures has led to an embrace of emerging technologies such as smart contracts to help improve back-end systems and processes, said YellowHeart’s Katz.

See also: CFOs Say Collections Need Balance of Automation and Personal Touch

With that blockchain tech in place, Merrill said, “There’s full transparency — and there’s no more worrying about a middleman or third party in accounting for payables.” That level of streamlined interaction does away with the cost- and time-consuming attributes of tracking traditional payment methods such as ACH and paper checks.

Routable’s Mor noted that all of these trends must converge, where transparency and accuracy must be paid with speed and flexibility … all of which is enabled by robust AP automation tools.

“These are all parts of a conversation that needs to happen with scale,” said Mor, “where there is money movement across multiple players, and perhaps even thousands of payables.” As payables teams and finance teams grow larger, he said, it becomes imperative to automate various business functions to boost efficiency.

Looking ahead, as Merrill noted, “It’s not a question of ‘if’ but ‘when’ your company is going to move everything to a digital payment platform of system — and the faster you move, the better off you are.”

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