Leveraging the Benefits of Digital B2B Payments

As the world of B2B payments evolves, many companies are looking for ways to leverage the benefits of digital payments for their customers, suppliers, and bottom line. According to Allied Market Research's September 2022 B2B Payments Market report, which used primary and secondary research that included over 12 hours of interviews and over 6,000 product literature reviews, the global B2B payments market was valued at $125432 billion in 2021, and it's projected to reach $313947.8 billion in 2031, growing at a CAGR of 9.9% from 2022 to 2031. 

Multiple factors are driving growth, including the ongoing digital transformation of many industries, the popularity of e-commerce, and the consumerization of B2B products and services. Today's finance teams want their business payments to be as simple and convenient as the rest of their online transactions.

While digital B2B payment solutions can offer multiple advantages, organizations still face challenges adopting them. Still, the shift to digital can be worthwhile. By understanding the benefits like access to working capital and reduced manual processes, companies can reap the rewards of digital B2B payments and grow their business as a result. 

Why Digital B2B Payments Can Pay Off

Digital payment solutions are transforming B2B payments across sectors and industries. Consumer payments have shown the business world the potential for easier online transactions. As a result, many employees, suppliers, and business leaders have similar expectations for their experience with business payments. Companies are responding, with 68% of U.S. businesses reporting they began automating their payment processes in 2023, up from 56% the prior year, according to the October 2023 American Express Trendex Report: B2B Edition¹. It's a smart move that may yield multiple potential benefits, such as:

1. Reducing manual processes

In many cases, organizations are still using manual processes to review and approve AP transactions. The American Express Trendex Report: B2B Edition¹ shows automating accounts payable processes may save an average of 9.9 hours per week – more than 500 hours per year. That's time organizations could use to facilitate other aspects of their finance operations, advance employees' skills, or do higher-level financial analysis that could benefit the company's performance. In addition, automation may reduce the possibility of human errors, which can delay payments or require follow-up that takes additional time. 

2. Refined cash flow management

Digital payment systems have the potential to accelerate payment processes, enhance visibility into an organization's cash position, and even increase access to cash. By speeding up the accounts receivables process, companies can get paid more quickly and then put that cash to work. Digital solutions also provide increased visibility into accounts payable and receivable, improving the ability to forecast cash inflows and outflows accurately. 

3. Enhanced fraud protection

Paper checks can be susceptible to fraud and forgery. Digital B2B payments reduce the need for paper checks. In addition, the solutions also usually employ advanced fraud prevention and detection methods. These may help companies stay ahead of fraud trends and stop fraud attempts before they become losses. 

4. Access to additional markets

Digital solutions often allow you to present your customers with multiple payment methods. These can enable the use of digital wallets or provide access to different currencies. Offering preferred payment methods has the potential to increase customer loyalty, accelerate payment timelines, and may even open up new markets for your company.

Hurdles to adoption

Even with the advantages digital payments can provide, organizations still face some challenges to adoption. One notable challenge is the current reliance on legacy payment systems and payment methods designed for a different era. Many companies still use paper checks. AP and AR systems designed to accommodate legacy payment methods often require manual transaction reviews and switching between multiple, disconnected systems. 

Changing and replacing known systems and processes with new digital solutions may seem more challenging than staying with the status quo. Organizations may be intimidated by the perceived heavy lift of transformation, both in terms of the cost and the time required to make the move. However, the ROI on digital B2B payments may make the investment worth the time and money. Digital and automated payments can eliminate silos, enhance data collection and analysis, and increase payment processing speed.

The overall impact can provide a boost to working capital. There's also the aforementioned potential enhancement in cash flow management, time savings, and the potential for reducing fraud losses, all of which may make investing in digital B2B payments a worthwhile effort. 

Going Digital  

How can companies manage these challenges and move toward digital B2B payments? It starts with education. You can consider whether digital solutions make sense for your organization and explore how specific benefits may help your company operate. Also, you can look for solutions that provide easy integration with your accounting systems and offer user-friendly features. That way, employees can quickly learn how to use them. It can help to note you don't have to make these changes all at once. Instead, organizations can test automated B2B solutions in one aspect of their payments processes, roll it out to others, and then see what works for their needs. 

As you embark on transforming your payments, consider digging into concerns that finance team members may have. Addressing concerns early, finding answers, and ensuring the employees working in the systems are comfortable with the shift can go a long way toward successful adoption. Also, you might consider prioritizing B2B payments solution vendors who understand your industry and can provide insights and guidance that can help make your project successful. 

The Takeaway

As the market for B2B payments is estimated to grow, emerging technologies and trends can bring additional business benefits. Modern AP automation solutions are becoming more accessible, cost-effective, and available to companies of all sizes.

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¹https://www.americanexpress.com/en-us/newsroom/articles/amex-for-business/payments-automation-is-supporting-u-s--business-efficiency-says-.html#:~:text=68%25%20of%20respondents%20said%20they,up%20from%2063%25%20last%20year

Methodology: The American Express Trendex: B2B Edition was conducted by Opinium research on behalf of American Express and the Centre for Economics and Business Research between May 23rd and June 15th, 2023. In the U.S., the sample was comprised of 1,051 senior decision makers across businesses of all sizes, with responsibility over at least three areas of the business.