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Powering B2B Innovation: The Game-Changing Role of Payment Technologies

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Powering B2B Innovation: The Game-Changing Role of Payment Technologies

Money is undergoing a sea change with the ubiquity of online commerce and the persistent march forward of digital technologies. Thanks to the Internet, e-commerce transactions at every level have exploded, resulting in a need for straightforward transaction processes that work for both sellers and buyers. Business owners need to be aware of partners’ and customers’ needs. Speed, reliability, and security all need to be considered. 

Read also: The Silent War: Banks vs. Fraudsters in the Era of Instant Payments and Opportunities

What Does B2B Payment Processing Entail? 

We’ve come a long way from the era when businesses settled invoices with physical checks that the recipient would deposit into their bank account. Today’s transactions involve numerous components, which can vary based on the industry and the specifics of the exchange. However, every transaction shares a few fundamental elements.

  • The seller or merchant. 
  • The merchant’s bank or payment processing service.
  • The customer.
  • Payment gateways.
  • Payment processors.

Sometimes, the seller and customer may use the same payment processing solutions; at times they will be different. Either way, any payment technology has to work seamlessly to cover the entire transaction. 

Payment Gateways and Processors

Payment gateways and payment processors are the two main components of transactions. A service like PayPal may serve both functions. A payment gateway is where consumers will input their financial information. By contrast, a payment processor conveys the payment particulars to the bank or service that handles the transaction. 

Innovations in Payment Processing

E-commerce’s quick rise makes firms face both new opportunities and threats. Punctual, accurate, and secure is what are wanted more than anything. These are some of the most impressive advancements in payment processing.

Faster and More Convenient Options

Modern payment gateways serve as a safe and quick mechanism to complete transactions. Customers no longer have to type in credit card details. Services such as PayPal, Stripe, and Square allow for one-click purchases. They are also not limited to online transactions; one can use a digital wallet for in-store payments as well. Furthermore, these instruments make issuing invoices for B2B transactions very convenient. 

Mobile Wallets For B2B Transactions

Digital wallets are commonly used for consumer transactions, such as a customer using Apple Pay to buy a cup of coffee or something in a grocery store. Nonetheless, businesses are adopting this technology as well. Mobile wallets give businesses more agility when buying and selling. The convenience of paying from their phones appeals to business owners and employees, who might purchase items out of the office.  

The Use of AI Tools

Artificial intelligence is increasingly used to make payment processing more efficient and secure. AI can help in several ways.

  • Speeds up transactions.
  • Consumer analytics can predict trends. 
  • Enhances security and fraud detection.
  • Lowers operational costs. 

Real-Time Payments

We are quickly moving past the days of waiting several business days for a check to clear. Payment processing keeps getting faster, and there are now options for instant payments. RTP, or Real-Time Payments, is a network that allows instant bank transactions. While now only used by about 25 banks in the US, RTP, and similar networks are likely to grow in the future. 

Blockchain in Payment Processing

In 2024, Bitcoin and other cryptocurrencies became a lot more mainstream. Blockchain technology has many other potential uses, including the potential to transform payment processing. This technology can speed up transactions and make them more secure. Blockchain can be especially beneficial for global payments. Currently, payment processing is often slowed down when companies use different banks in different countries. With blockchain technology, transactions can be instantly verified without the need for banks.  

Top Concerns to Find the Best Payment Solution

The way you handle payments is a critical aspect of your business. You need solutions that are convenient, affordable, and secure. Here are some of the main points to consider when comparing payment processing solutions. 

Flexible Features

You want a solution that makes it convenient to process payments. Features to look for include the following. 

  • Supports a variety of uses and industries, with both online and offline payment options. For example, for brick-and-mortar businesses, look for contactless payment solutions. 
  • Works with multiple payment options. Aside from credit cards, you may want to offer online check processing, including eCheck and ACH direct deposits. 
  • Offers protection against fraud and chargebacks.
  • Lets you see analytics. Identify trends such as seasonal fluctuations and how you are doing compared to competitors. 
  • Scalable. Supports your current needs and works with you as your business grows. 

Cost

Understanding the actual cost of using a payment processing service can be tricky. They often spread charges to different areas of your bill. You need to look carefully at all extra charges and how this will affect the total cost.

User-Friendliness and Customer Service

Every service is a little different, and many offer various features. There’s often a learning curve for making the best use of payment processing services. Choosing a company that makes the features easy to use is best. You also want to be able to contact knowledgeable customer service representatives when needed. 

Security

You must make security a priority. A data breach can be catastrophic for your business, and customers need to feel confident that they can do business with you. Look closely at the security protocols used by a provider and check their track record for security as well.

Integrations

It’s convenient to use a payment processor that works seamlessly with other software you use, such as business management software. Integrations not only help you maximize productivity, but they can also provide valuable analytics. For example, your payment processing service may also track customer trends to help you increase conversions.  

Payment Technology is Quickly Evolving

Numerous innovations in payment processing are on the horizon, especially in areas like artificial intelligence and blockchain. Various industries are adopting new working conditions that require equally flexible monetary solutions. The rise of remote work has created a demand for purchases from office environments. Staying updated on all the latest developments allows one to find the most effective tools and services available.

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Navigating B2B Payments Transaction:  Market to Surpass USD 3.5 Trillion by 2033

Introduction

The B2B (business-to-business) payments transaction market refers to the electronic transfer of funds between businesses for the settlement of goods, services, or other commercial transactions. This market includes a wide range of payment methods such as wire transfers, ACH (Automated Clearing House) payments, credit cards, and emerging technologies like blockchain and digital currencies.

Read also: It’s Time for B2B Enterprises to Accelerate Adoption of Digital Payments

According to the Market.us Report, the Global B2B Payments Transaction Market is projected to experience significant growth over the next decade. It is expected to increase from USD 1.4 trillion in 2023 to an estimated USD 3.5 trillion by 2033, representing a compound annual growth rate (CAGR) of 9.5% during the forecast period from 2024 to 2033. This growth is driven by several factors, including the ongoing digital transformation, increased adoption of advanced payment technologies, and a greater emphasis on streamlining business-to-business transactions.

In 2023, North America held a dominant position in the global market, capturing more than 40.9% of the total market share. This region generated a revenue of USD 0.5 trillion, thanks to the widespread use of digital payment solutions, well-established financial infrastructure, and the presence of key industry players in the region. North America’s strong economic performance, along with the growing adoption of digital platforms for business payments, has further solidified its leadership in the global B2B payments sector.

As businesses worldwide continue to seek more efficient and secure methods of conducting cross-border transactions, the B2B payments landscape is undergoing rapid transformation. Key drivers of this growth include innovations in payment technologies such as blockchain, artificial intelligence, and machine learning, which are enabling faster, safer, and more transparent financial transactions. The increasing demand for automation in business processes, as well as the shift towards integrated payment systems, is also fueling the expansion of this market.

B2B Payments Transaction Statistics 

  • The Association for Financial Professionals reports that nearly 80% of B2B companies are in the process of digitizing their paper payment systems. This transition mirrors the steep drop in check usage for B2C transactions, which plummeted by 60% from 17 billion in 2010 to just 6.5 billion in 2018. If this trend persists, checks may all but disappear from the B2B space within the next 20 years, much like they have in consumer payments.
  • Recent surveys show that 64% of financial institutions are either “very” or “extremely” keen on adopting technology that would bring a more consumer-focused approach to B2B payments.
  • Around one in five financial institutions is developing in-house solutions to reduce friction in B2B payments. This effort becomes even more pronounced among larger institutions, with 90% of those holding over $100 billion in assets actively working on such products.
  • As per Fit Small Business report, in 2023, the B2B sector represented 20.6% of all cross-border transactions, totaling $39.3 trillion. Looking ahead, this share is set to grow significantly, with projections estimating it will hit $56.1 trillion by 2030, driven largely by the surge in B2B ecommerce.
  • Based on the Allianz Trade report, merchants providing BNPL options have experienced up to a 40% boost in conversion rates, leading to a substantial increase in sales.

Technological Innovations

B2B payments are rapidly evolving with a range of technological innovations designed to streamline transactions, improve efficiency, and reduce costs. Blockchain technology is one of the most significant advancements, offering secure, transparent, and real-time payment processing. By eliminating intermediaries, blockchain helps reduce fraud and transaction fees, making it highly beneficial for cross-border payments. 

Additionally, the adoption of Artificial Intelligence (AI) is transforming payment processes by automating tasks like fraud detection and transaction reconciliation. AI can also predict payment behaviors, allowing businesses to manage cash flow more effectively. Another important innovation is the rise of cloud-based payment platforms, which offer scalability, flexibility, and enhanced data security. These platforms allow businesses to integrate payments into their broader financial management systems seamlessly. 

Latest Trends

Blockchain technology is becoming more relevant in the B2B space, particularly for cross-border transactions. The transparency and security provided by blockchain can help reduce fraud, speed up transactions, and improve overall trust between businesses. Additionally, cryptocurrencies like Bitcoin and Ethereum are slowly making their way into the B2B payments landscape, particularly in industries that need fast and borderless transactions.

Automation is one of the biggest game-changers in B2B payments. Companies are increasingly adopting tools that automatically handle invoicing and reconciliation, reducing the manual work and errors involved in these processes. This trend is helping companies streamline their cash flow management and improve payment accuracy.

Top Opportunities

As businesses continue to adopt digital solutions for their payment processes, several key opportunities in the B2B payments transaction space are emerging. More businesses are adopting BNPL options, allowing companies to defer payments while receiving goods or services upfront. This improves cash flow and gives businesses the flexibility to plan for future expenses, making it easier to manage large purchases.

APIs (Application Programming Interfaces) allow businesses to integrate payment systems directly into their software, creating a seamless experience. This reduces friction in the payment process and gives businesses better control over their financial operations.

Fraud prevention is a top concern for B2B payments. AI and machine learning technologies help identify suspicious transactions in real time, offering businesses stronger protection against fraud while maintaining smooth payment processes.

Major Challenges

Despite the advancements in B2B payments, companies continue to face several challenges. One of the biggest hurdles is the complexity of cross-border transactions. International payments often involve multiple intermediaries, differing currencies, and varying regulations, which can delay transactions and increase costs. Fraud prevention also remains a significant challenge, as cybercriminals increasingly target businesses through phishing scams and payment fraud schemes. 

The complexity of integrating new payment technologies into legacy systems can also be a barrier, particularly for smaller businesses with limited IT resources. Additionally, businesses are often faced with the challenge of ensuring compliance with constantly changing regulatory requirements. This is particularly relevant in regions with strict data privacy laws, such as GDPR in Europe.

Competitive Landscape

The B2B payments transaction market is highly competitive, with several key players leading the charge in terms of innovation, market share, and global reach. 

JP Morgan & Chase is the largest and most established financial institution globally, JP Morgan & Chase is a dominant player in the B2B payments space. The company offers a comprehensive suite of payment solutions for businesses, including wire transfers, ACH payments, and merchant services. JP Morgan’s extensive global network and robust security infrastructure make it a preferred choice for businesses engaged in international trade. Their corporate payment solutions are designed to streamline the payment process, reduce operational risks, and improve cash flow management. 

American Express (AmEx) has long been a key player in the B2B payments market, particularly in the area of corporate cards and expense management. The company offers businesses a wide range of tools that simplify payments, improve control over spending, and provide valuable insights into financial operations. American Express’ B2B payment solutions are especially popular among small and medium-sized enterprises (SMEs) and larger corporations due to their rewards programs and tailored solutions for travel and procurement.

Stripe Inc. has emerged as a key player in the B2B payments market, especially within the technology and e-commerce sectors. The company provides a seamless platform for online businesses to manage payments, subscriptions, and invoicing, with a particular emphasis on integration and ease of use. Stripe’s solutions are highly favored by startups, developers, and global enterprises due to their flexibility, scalability, and powerful API capabilities. 

Payoneer Inc. is another significant player in the B2B payments transaction market, specializing in cross-border payments and international money transfers. Payoneer provides businesses with a platform to send and receive payments across borders, making it easier for companies to engage in global trade. With a wide-reaching network that supports over 150 currencies, Payoneer is particularly popular among e-commerce businesses, freelancers, and digital platforms.

Conclusion

In conclusion, the B2B payments transaction market is poised for continued growth as businesses prioritize digital transformation to remain competitive in an evolving economic landscape. With a growing focus on automation, security, and real-time payments, the market is set to offer greater opportunities for businesses to optimize their financial operations. Companies that embrace these technologies will be better positioned to manage risk, improve supplier relationships, and drive operational efficiency in an increasingly digital world.

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The Silent War: Banks vs. Fraudsters in the Era of Instant Payments and Opportunities

Banks should see securing instant payments not just as an obligation – but as the key to a whole new range of product and customer service opportunities.

Read also: Why You Should Optimize Your Payments Stack for a Successful Cross-Border Expansion

The demand for instant payments – both from businesses and consumers – continues to gain traction and with that traction has come a broader expectation for immediacy and a seamless user experience. Just as digital services like video streaming or content downloads deliver near-instant access, users now expect payments to match this speed and ease. There is a global push for real-time payments as it transforms industries by enabling faster fund transfers, reducing reliance on cash, and improving business’ cash flow. With advancements in digital security, there’s an added emphasis on ensuring these speedy transactions remain just as secure as they are fast. This couldn’t be more important since instant payments are projected to grow at more than 35% Compound Annual Growth Rate (CAGR) globally over the next six years, accounting for more than one in three payments by 2030. Unfortunately, this surge in instant payments also presents increased challenges in safeguarding financial security and necessitates the implementation of enhanced anti-fraud solutions.

McKinsey’s State of consumer digital payments in 2024 highlights a steady rise in digital payment adoption in both the U.S. and Europe. This year’s survey is the first to assess both regions, showing that consumers are not only using various digital payment methods more frequently but are also increasingly starting their buying journeys with these options. Platforms like buy now, pay later (BNPL) and offer marketplaces are examples where digital payments are the starting point of consumer decision-making, rather than merely a checkout tool.

Instant Payments Present Challenges for Limiting Fraud Risk 

Along with consumer adoption of the digital payment trend comes an increasing need to manage fraud risk.  The rise of unregulated payment channels, such as cryptocurrency exchanges and peer-to-peer platforms, yields new opportunities for fraudsters to target. Instant payments present unique challenges in managing authentication and fraud risk due to their rapid settlement requirements, often occurring within less than a second.

This tight timeframe limits the opportunity for banks and financial institutions to conduct in-depth verification and confirmation of both the payee and transaction details, leaving limited room for fraud detection before the payment is finalized. The rapid pace of these transactions can increase exposure to fraud if real-time protections are not implemented effectively, making instant payments a high-stakes area for risk management.

The ambiguity around liability for losses in instant payments also creates a complex risk landscape for financial institutions. In jurisdictions without clear guidelines, determining responsibility for covering fraud-related losses can be challenging. This can expose banks to financial risks and potentially damage their reputations if customers bear the brunt of fraudulent transactions. This lack of clarity underscores the urgent need for regulatory frameworks and industry-wide standards to define accountability and create consistent consumer and institution protections.

The U.S. and the EU are Relying on Regulatory Standards for Fraud Identification 

FedNow, launched in July 2023, is a service from the U.S. Federal Reserve that allows banks and credit unions to offer instant payment services to their customers. Of the approximately 10,000 financial institutions in the U.S., more than 1,000 have already joined the platform, which allows members to offer instant payment services. While FedNow relies on banks to be the first line of defense in fraud detection, it does offer some risk mitigation services. However, it relies on the institutions themselves to monitor and report fraud activity to be shared among member organizations. New regulations in the EU, taking effect in December 2024, will require banks to offer significant fraud protection services. 

Revolutionizing Banking: The Power of Instant Payments

While the shift toward instant payments may present certain complexities, it offers banks a unique opportunity to elevate customer service, significantly boost satisfaction and retention, and introduce innovative services like Authorized Push Payments and Request to Pay.

The European Commission has mandated that all EU banks must be equipped to receive instant payments compliant with the SEPA SCT-Inst standard within nine months of the December 2024 deadline. Moreover, they must be capable of sending SCT-Inst payments eighteen months after this deadline.

To ensure the security of these transactions, banks are obligated to implement robust measures to protect customers from fraud and liability. In response, EBA Clearing, the European Banking Association’s independent payment services organization, has introduced FPAD (Fraud Pattern and Anomaly Detection), a cutting-edge fraud detection and prevention service designed to safeguard both banks and their customers in this new era of instant payments.

Launched in March 2024, this game-changing service draws on the billions of transactions processed by EBA Clearing annually, providing banks with a comprehensive understanding of payment and beneficiary account behaviors. The added value of the FPAD service goes beyond individual institutions’ efforts in fraud prevention. By utilizing a network view, the FPAD service offers banks or PSPs an enhanced view of risks, allowing for more precise risk management. Enhancing in-house fraud prevention systems with FPAD’s analytics and detection capabilities can significantly reduce the number of false positives, streamlining operations and improving overall efficiency. Additionally, the EU has announced the introduction of Verification of Payee (VoP) services from March 2024, with banks facing the obligation to introduce VoP for customer accounts no later than October 2025. 

VoP services enable clients to check that their money is going to the right account – an important security measure for instant payments, where transaction and settlement should take place within 10 seconds.

A Catalyst for Innovation and Customer Centricity
The rise of instant payments and immediate settlement of funds between accounts, reveals a cornucopia of opportunities for banks to innovate and enhance customer service. Industry experts within the financial crime fighting community envision a spectrum of product possibilities that cater to diverse customer needs. In order to mitigate the risk of fraud, payments experts need to be thinking ahead and partnering with their banking customers.

For example, instant payments streamlining Business-to-Business (B2B) transactions should bring progress in supply chain finance. By enabling near-instantaneous payments between businesses, banks can expedite the flow of funds and reduce payment cycle times. This translates to improved cash flow management and increased efficiency for businesses of all sizes. 

The reach of instant payments extends beyond domestic borders as well. Banks will be able to facilitate quicker international transactions with reduced fees. This opens doors for greater global commerce and enhanced accessibility for individuals and businesses alike. For fraud experts, it is important for them to have experience in cross-border fraud where stronger authentication measures are employed and closer collaboration between financial institutions and law enforcement agencies across different jurisdictions can share information and coordinate efforts to combat this type of fraud.

Beyond traditional payment processing, instant payments pave the way for innovative financial products. Banks will be able to introduce real-time loan and credit solutions, offering instant credit decisions and disbursals to qualified customers. This will eliminate the lengthy application processes associated with traditional lending, providing a more efficient and user-friendly experience. For the fraud expert protecting the bank, it will be key that they apply sophisticated KYC (know your customer) anti-fraud measures.

The world of micropayments, often used for digital goods and services, can also benefit from instant payments. Banks will be able to enable seamless and secure transactions for small, frequent payments, fostering a more convenient ecosystem for both consumers and businesses. For the anti-fraud expert, AI can efficiently identify patterns and anomalies. Additionally, subscription payments will be automated with greater flexibility and accuracy, ensuring timely payments and eliminating the risk of service disruptions.

Given these opportunities to offer enhanced products and services, banks are wise to invest in robust anti-fraud measures to help with their business growth. Real-time transaction monitoring that employs advanced AI and machine learning to identify suspicious activity patterns will be key. Using fraud prevention software to analyze transactions and flag potential risks should be integral while employing enhanced multi-factor authentication (MFA) to add layers of security. Still, it is equally important for financial institutions to provide clear guidelines to their customers on how to recognize and prevent fraud and to encourage them to report suspicious activity promptly.

Navigating the Challenges: Security and Compliance

While instant payments offer a plethora of opportunities, it’s crucial to acknowledge the associated challenges. Robust security measures are paramount. Banks need to implement strong authentication and fraud prevention technologies to safeguard customer information and financial assets. Real-time monitoring of transactions for suspicious activity and swift responses to potential threats are essential to maintaining a secure environment. Additionally, educating customers about best practices for online security empowers them to be active participants in protecting their personal information and financial well-being.

Regulatory compliance remains a crucial aspect of navigating the instant payments landscape. Banks must stay up to date with evolving regulations and industry standards. Developing effective compliance programs ensures adherence to regulatory requirements and mitigates potential risks.

Customer Education: Building Trust and Confidence

Customer education plays a vital role in the successful adoption of instant payments. Banks should provide clear and comprehensive information about this technology, highlighting its benefits, security measures, and potential risks. Addressing customer concerns about security and privacy builds trust and encourages them to confidently utilize these innovative payment solutions.

Offering training and support empowers customers to navigate the instant payments ecosystem more safely and effectively, ensuring they can fully leverage the convenience and benefits offered by this technology.

Conclusion: A Promising Future

By embracing instant payments and addressing the associated challenges, banks can position themselves as leaders in the digital age. This technology unlocks a world of possibilities for product innovation, customer service excellence, and increased customer engagement. By leveraging instant payments effectively, banks can drive financial inclusion, streamline business operations, and ultimately, deliver exceptional customer experiences. Nevertheless, they shouldn’t do it without first investing in an AI-powered anti-fraud solutions. 

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It’s Time for B2B Enterprises to Accelerate Adoption of Digital Payments

Whether online or in-store, consumers today expect to be able to pay for goods and services in the manner they choose, be it credit, debit, ACH, PayPal, Venmo, etc. Consumer-facing companies have, for some time now, been investing in and integrating a wide range of payment capabilities to accommodate this expectation and provide their customers with a seamless shopping and paying experience.  

Read also: B2B Payments: The Next USD 38.2 Billion Market

While the modernization of payments has progressed in the consumer arena, the speed at which B2B companies have done the same has paled by comparison, for any number of reasons. 

In some cases, limitations of existing accounting systems have prevented B2B companies from migrating to electronic payments or moving away from paper checks delivered via regular mail. The perceived costs and headaches of implementing a digital payments platform have also been a contributing factor. In other cases, B2B companies have simply been reluctant to disrupt the processes to which their customers have become accustomed.

However, the dynamic in the B2B environment is changing, driven in large part by customers who are now buying online 74% of the time. As comfort levels and familiarity with digital payments have increased, B2B customers increasingly want the same touch-free payment experiences they enjoy as consumers, with multiple payment options and without having to handle money or physical checks. 

Many B2B enterprises are responding to the changing environment and introducing new digital payments options. But not in all cases. Those that have been slow to adapt are not only running the risk of failing to meet customer demand for enhanced payments experiences, but they could also be missing out on some of the following broader business benefits as well:

Enhancing Business Operations and Performance 

The breadth of capabilities offered by a digital payments platform extends well beyond the basics of executing a transaction. Modern, digital payments platforms also serve as an extension of existing accounting and AR systems that, depending on age, are often rigid and inflexible. Digital payments systems enable B2B companies to automate processes guided by specific rules and well-defined workflows. The ability to forecast and manage cash flow is enhanced, particularly for companies with multiple lines of business and different types of invoices going out to a wide range of customers. In summary, an enhanced payments system elevates operational performance across the business. 

Elevate Customer Experience and Engagement

Payment and billing data is the oil for any company’s customer support engine, in B2B as much as B2C. When customers engage with service representatives and data is not readily available, or sitting in siloed Excel spreadsheets that are difficult to share among teams, frustration can certainly be expected. B2B companies that adopt digitized and modernized payment capabilities will also have increased internal visibility and access to information that can be acted upon, improving customer service and producing opportunities for upselling new products and services.

Reducing Inefficiencies

According to a recent survey, processing a single invoice can require the involvement of as many as 15 people doing 11 hours of work. Often, it’s the legacy accounting systems that pose hindrances, forcing accounts payable and accounting teams to spend copious amounts of time reviewing invoices, determining which ones need to be paid, implementing requests from customers, checking across CRM systems and emails, and so on. A modernized payments system reduces all those inefficiencies, allowing B2B companies to accept and process payments, follow up with customers regarding non-payments, issue refunds, and increase the speed with which outgoing invoices are paid, all while freeing employees to spend time on more substantive issues. 

Across many companies, there is a tendency to keep doing things the way they have always been done. This inertia often extends into payments. However, for B2B companies, the option to leave well enough alone is quickly dwindling, especially for those with designs on selling directly to consumers. Migrating to digital payments will reduce friction across all invoicing and payment processes, increase the speed with which money is collected, and provide a measurable operational lift for the enterprise.   

Author Bio

Henry Helgeson is an entrepreneur, investor, and CEO of BlueSnap, a global payment orchestration platform for leading B2B and B2C businesses.

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How to Tackle the Top 3 Challenges in Business Payments

Working with multiple systems, the growing threat of fraud, and the lack of visibility into data are the top three challenges treasury professionals face with business payments. That’s according to the Strategic Treasurer 2022 Global Payments Survey of over 230 treasury and payments professionals. 

These challenges are not surprising. The pandemic put the push to digitization into overdrive. However, adding more electronic payment types and digital systems creates more workflows and disparate sources of data to an already complex operation. At the same time, the rise in ACH payments has unleashed a new wave of sophisticated business email-compromise schemes. With so many people changing jobs since the pandemic, these challenges are now even more acute.

What’s perhaps surprising is that these concerns rose to the level of “top challenge” for companies far more frequently than concerns such as maximizing card rebates and vendor discounts, and utilizing different payment types to optimize working capital. 

These are still important, but not nearly as important as making sure the day-to-day process of managing payments works smoothly. These findings of the study square with the top challenges we see working with treasury and payments professionals.

Challenge 1: Using multiple systems

The top challenge, cited by 58% of respondents, is that they’re working with multiple systems. That is difficult when systems are not fully integrated, and just 5% of respondents said their ERP system was fully integrated with their banking platforms. Nearly 90% said there was some integration, while 21% said their ERP system is not connected to their banking platforms at all. 

What we see is that having systems that are not fully integrated means teams find themselves having to run overlapping processes. They’re toggling between systems and exporting data from one system to a spreadsheet and manually uploading it to a different system. 

At the same time, they’re managing a different workflow for each payment type or program. More than 80% of respondents are originating payments with more than one bank. More than 75% use bank portals for payment connectivity, and 48% cite banks’ complex formatting requirements as a challenge.

Challenge 2. Security and fraud management

Preventing fraud is more of a challenge for smaller firms, with 55% citing it as a top concern compared to 36% of those at large firms. What we’re seeing is that smaller companies are experiencing more of these email-based attacks, probably because their systems and processes simply can’t keep up with fraudsters’ pace of innovation. The fear of an attack is greater because the impact to a smaller company is much bigger.

A larger company with a big balance sheet can weather a fraudulent attack more easily, but it can put a real strain on a smaller company. At Corpay, we have processes in place for helping our clients recover fraudulent payments. A lot of small companies can’t afford to lose access to their money for that long. 

Challenge 3: Accessing real-time, accurate data

Getting real-time visibility into payments data seems to have risen in importance, with 43% of respondents saying it is a top challenge. This is perhaps a sign of changed expectations in a world that is becoming increasingly digitized. It wasn’t that long ago that most vendor payments were made by paper check. In that world, real-time visibility was just a pipe dream. 

As the rest of the organization digitizes and decision making becomes more data driven, there’s greater demand to provide more timely financial data. 

But the challenge isn’t confined to slower reporting. Reconciliation takes longer, which means that job costing takes longer. In industries like construction, where costs are passed through to the customer, that means that billing is delayed. That, in turn, creates challenges with cash management. 

What’s interesting is the extent to which the top three challenges are interrelated. It’s hard to deliver timely, accurate data when you’re working with multiple systems and there’s no standardization. The level of complexity that people are managing creates constant time pressure, giving fraudsters an opening to slip in. Furthermore, delayed data can prevent daily reconciliation, which is one of the best practices for catching and recovering fraudulent transactions. 

The linkage between these challenges suggests that the same solution can eliminate many of them. Companies seem to be moving in that direction. The top investment areas are AP automation, which could include invoice and/or payment automation, and payment services. 

Payment automation allows customers to wrap up disparate payment processes and bank connections into a single workflow. AP only needs to transmit one file to the payment provider, and they receive back standardized remittance data. Using APIs, file transmission can be initiated from the ERP system and the remittance data drops right back in there. 

Outsourcing payment services is a more robust solution, encompassing automation, vendor enablement, and data management within a B2B payment network. Payment service providers also handle time-consuming, back-end issues such as error resolution and escheatment. What we typically see with customers who go the outsourcing route is a 75-80% reduction in time spent on payment processing.

There’s a talk track in the profession about turning accounts payable from cost to profit center through increased credit card rebates. The promise of high rebates on spending you’re already doing is attractive. But if your processes are still largely manual and you’re having to hire extra staff to run the process, that can easily cancel out the gain. And it doesn’t position your organization to scale. 

The responses to this survey make it clear that the first order of business is to make sure the process actually works in a scalable, reliable manner with the required protection and visibility. Solutions that address vendor payments holistically and simultaneously streamline complex processes, reduce fraud risk, and give you visibility into the status of all your payments. That, in turn, greatly improves your ability to manage working capital, capture discounts, and make more payments via credit card, thereby increasing rebates and helping you meet your cost cutting goals.

Sven Hinrichsen is SVP of Strategy for Corpay Payables, which enables businesses to spend less through smarter payment methods

 

 

 

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Why the Players That Focus on Both Sides Will Win the B2B Payments Market

Remote work initiatives have created a strong tailwind for digitizing business payments, with companies rushing to move away from checks and onto card and ACH payments. This huge market–roughly 10 times the size of the consumer payment market–is ripe for change. Over the past decade, a decent amount of investment has gone into this area. Everyone is getting into the game: banks, card providers, and fintech providers, for example. It’s very early days, with paper checks still the predominant form of payment in the US. Who will win the market? Ultimately, it will be the players that can best address the needs of both buyers and suppliers.

I’ve spent time on both sides. Before coming to Nvoicepay, which helps automate the payment process on the accounts payable side, I was with Billtrust, which automates accounts receivable. Their founder and CEO, Flint Lane, was a big believer in the need to solve for both sides of the equation. That was my first introduction to the concept. Now, having sold into both accounts receivable and accounts payable, I’m a firm believer as well.

Two Sides of the Coin

There are two sides to every payment—creation and receipt. When it comes to consumer payments, both sides are straightforward, especially with today’s technology. But in the world of business payments, process complexity adds friction between them. Accounts payable’s goal is to manage cash flow by hanging on to money as long as possible. That puts them at odds with accounts receivable, who wants to get paid as quickly as possible. Digitizing transactions doesn’t efficiently address the complexity or friction between the sender’s and receiver’s processes. And the lack of consideration can worsen the issue.

For example, funds sent by accounts payable may hit their vendor’s bank faster with card or ACH payments, but a complicated payment application process can lose the receivable department precious time anyway. Without a way to streamline the process from beginning to end, simply switching to electronic means in a few places may not offer the time savings that businesses hope to achieve.

What’s the Solution?

Portals work well for larger companies that can dictate the terms of doing business to their smaller customers. But their customers may not be happy having their own interests dictated to them. And if you don’t have that kind of authority, chances are your portal will go unused because you’ve created a one-off process for your customers, making life harder for their accounts receivable people.

Electronic means can help accounts payable make payments at the last minute, and they’d prefer paying by card over ACH because they can make money on card rebates. But convincing suppliers to accept card is often a challenge because the accompanying fees can get expensive very quickly. Meanwhile, enabling suppliers for ACH translates to AP managing large amounts of sensitive bank account data.

Many organizations end up “dabbling” in electronic payments because of these enablement challenges. That leaves them managing four different payment workflows–card, ACH, wire, and a whole lot of checks. This is the problem that payment automation providers solve by taking on the supplier enablement process, maximizing card rebates, and simplifying AP workflows.

As much as both sides might agree that digital payments are the future, they’re stuck between a rock and a hard place without automation.

Paving the Way

Fintech businesses like Nvoicepay and Billtrust are bringing automation to payables and receivables separately, and that’s a big step forward. I believe the next generation of solutions will bring both worlds together on a flexible, dynamic platform where both parties to a transaction can choose from a range of options that best meet their needs at any given time.

From an accounts receivable perspective, funds need to be accompanied by enhanced digital remittance information. They could offer buyers incentives in dynamic discounts in exchange for speedy payment and a streamlined cash application process through the platform.

On the buying side, easy access to supply chain financing could allow them to take advantage of such discounts while at the same time extending payment terms. The buying organization takes its two percent discount and gives half a percent to the financing organization, paying the invoice within the discount window. Then the buying organization pays the financing organization in 30 days. Payables manages cash, gets part of the discount and a rebate if they pay by card.

Bringing it All Together

The key to creating these win-win outcomes is including the presence of a technology platform that uses data to offer convenience and choice, allowing organizations to meet whatever their needs happen to be at any given time. For example, if your cash position is good, you may not offer discounts or offer them more selectively. If you work with many small suppliers with tight margins, consider taking the card option off the table.

These are not new ideas, but they haven’t yet been addressed effectively with technology. Historically we’ve tried to do this through EDI (Electronic Data Interchange), a computer-to-computer communication standard developed in the 1960s. It’s always been very clunky, and it is unwieldy for the volume and velocity of data in the supply chain today. However, a majority of organizations still use it for lack of anything better.

Nacha and the Real-Time Payments Network add remittance data to ACH payments, but that’s not a complete answer. There still needs to be some technology put in place to incorporate the data into payment workflows.

Suppose you look at fintech innovation in the consumer payments market as a leading indicator. In that case, it’s been less about new payment products and more about using technology to send and receive money seamlessly, regardless of which electronic network is used.

In B2B payments, fintechs changed the game by thinking about payments as a business process rather than a collection of products, and built software solutions to automate those workflows. With remote work providing an additional incentive, many more organizations are adoping electronic forms of payment. That, in turn, makes data more available to continue developing digital platforms. Whoever gets there first has a good chance of becoming the leading player, but you won’t get there at all if you don’t build for both sides of the equation.

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Derek Halpern is Senior Vice President of Sales for Nvoicepay, a FLEETCOR Company. He has over 20 years of technology sales and leadership experience, including 16 years in the fintech and payments space. 

payment

How Payment Automation Can Positively Transform Your Logistics Company

Cutting down on your business’ costly, high-effort administrative tasks is always a great idea. Especially when doing so also increases accuracy and limits human errors.

One of the many operational areas where automation can play a positive role in your company is in its accounts payable (AP) departments. 

Despite how incredibly admin-heavy payment processes typically are, AP departments still seem stuck in an outdated paradigm. We get it, though. It feels risky to digitize long-established manual processes. It rocks a boat that feels stable, albeit moving really slowly. But digitization and automation, as scary as it sounds, is an absolute necessity if you want to survive in the world of logistics. 

As we referenced in a previous article on this topic, the AFP reported that 42% of all payments that businesses make still happen by printed checks. This represents a shocking amount of wasted effort. Especially if you consider the many alternatives available to AP departments nowadays.

At the same time, the payment automation industry has matured significantly. As a result, the available solutions in this space have grown in number, capabilities, and reputation. The genuinely exceptional products in this niche are enabled by innovative technology and supported by intuitive workflows. They utilize reliable, secure financial processes. 

Here are some tangible rewards your logistics company will enjoy once you’ve modernized it with one of these automation solutions.

It Speeds up Invoice Approval

According to Stampli, 57% of companies who switched to AP automation did so because it reduces invoice approval time.

In the logistics industry, where businesses rely on the services of many external service providers, unpaid invoices can quickly start piling up. This can cause an admin backlog that’s not only an operational headache to fix but can also have more serious consequences. In extreme cases, unpaid invoices can disrupt supply chains and damage the reputations of both logistics companies and their customers.

Automatic payment solutions typically enable effective workflows that simplify approvals and lower the risk of unpaid invoices falling through the cracks. 

These tools act as a dedicated, real-time communication channel between AP staff and other resources within the company. They also offer digital approval mechanisms that almost entirely remove the need for physical interaction and document handovers.

It Improves Morale and Accuracy

Data entry and invoice management both feature very prominently in Business Insider’s list of organizational morale-killers. 

Unfortunately, the nature of an AP department’s work dictates that these two tasks take up quite a bit of the average clerk’s time. Repetition leads to boredom, and boredom can lead to a lack of focus and mistakes.

This is human nature. Management or incentivization are not sustainable solutions to this inescapable reality of the manual workplace. 

What’s the answer, then? (No prizes for guessing.)

Tools that enable payment automation often include features like automatic data extraction, AI-powered data matching, and character recognition, and automated ledger capturing. 

All of these are excellent alternatives to an analog approach that’s compromised by tedium and an inevitable lack of focus.

It Prevents Payments Being Overlooked

People make mistakes. They forget to do stuff, even things that are a core function of their job. No one is infallible. 

Even when all the necessary details are taken care of, the human being responsible for clicking on the “pay” button or for taking a check to the bank can still simply forget to do so.

The fallout from this little oversight can be significant. Late payments hurt reputations. They can severely disrupt supply chains. And missing out on early-payment discounts can damage cash flows, especially when dealing with large invoice amounts as logistics companies often do.

By design, automated payment systems avoid this scenario entirely. Each tool offers a slew of features that help AP teams make sure payments are made on time. 

It Creates an Additional Source of Usable Data

One of the biggest rewards of being a data-driven company is that strategic decisions can be based on cold, hard facts rather than hunches. 

In a professional environment that’s as cutthroat as logistics, we cannot afford to rely on hunches. No matter how much instinct or insight a manager may have, nothing is going to beat meaningful data when it comes to supporting important decisions.

In all likelihood, your logistics company is already using an operations tool like CarLo, Descartes, and SBT to create meaningful information. You may even be using your CRM, accounting, or HR tools to contribute to the data pool that drives strategy.

This is a great position to be in. The usefulness of data improves dramatically as one combines information from various sources within the organization.

If your AP department is still running on pens, ink, and visits to a bank, it’s creating no digital data. And there’s no way for it to contribute to the data stacks that inform important decisions within the company.

A solid payment automation tool will solve this problem, creating cloud-hosted data that your business intelligence software will easily be able to reference.

In Closing: the Importance of Finding the Right Fit

Not all payment automation solutions are created equal. They differ in terms of price, workflow enablement, technical features, and sensitivity to industry regulations.

That’s why it’s vital for you to do a thorough investigation into the products in this space and choose one that best suits your logistics company. 

Take your time and think through what sets one solution apart from another. Be sure to invest in one that’s not only ideal for the nuances of your industry but also your company’s established workflows and culture.

This is a big decision. The stakes are high. Don’t hesitate to involve your entire AP team to get their input. Each of them will be able to provide unique insights into their daily tasks and advise on how a particular product could help them or hinder them.

credit cards

Why Credit Cards Could Be the Next Big Opportunity in B2B Payments

With the advent of widespread remote work, businesses have made impressive leaps in eliminating checks and adopting electronic supplier payments. These changes primarily translated to increasing the number of ACH or Direct Deposit payments made. According to Nacha—the governing body for the ACH network—business-to-business payments for supply chains, supplier payments, bills, and other transfers increased by almost 11% in 2020. But as organizations adopt electronic payment processes, there’s another strategic opportunity for AP to consider: electronic credit card.

Most companies’ payments flow through AP, yet few AP departments today are making significant use of credit cards to their fullest potential. Historically, companies use credit cards as a decentralized way to manage expenses. In order to do their jobs, employees need to spend efficiently, without going through a bureaucratic process. Traditional commercial programs have been focused on companies giving their employees purchasing cards (p-cards) or travel and entertainment cards (T&E cards) which they could use for supplies, meals, or departmental expenses such as software subscriptions, and marketing expenses—items that would be classified as indirect spending. However, while the benefits of these programs are clear, even in a depressed travel environment, it falls short of the full potential of complete credit card utilization.

Old vs. New

Companies can establish guardrails for spending on these cards. They can add controls to limit employee spending or only allow them to spend in certain places. There are also mechanisms in place to do post-transaction reviews and allow for remediation for inappropriate spending. Due to the combination of convenience and control, finance departments often think about cards as tools for employee productivity, with customizable spending controls.

This only touches on one aspect of company spending, however. Companies spend far more of their budget through traditional purchase orders and invoices for direct expenses like materials, components, freight, and labor. The idea that AP could utilize a card for direct expenses has still not been widely accepted.

Cards provide easy access to working capital and offer rewards like cash back or points. Many companies appreciate that cards are a better electronic payment option due to these benefits. The question then becomes: how do you build a successful card program in accounts payable? Generally, businesses have to make card processes work within their pre-existing AP infrastructure, which usually includes a supplier interaction component and a technical component that traditional players (banking institutions) in this space are not fully equipped to handle.

For example, banks primarily look at credit cards as another form of lending. They offer credit lines, which their customers spend against and pay back. Paying supplier by card usually enables businesses to reach their top 10 or 20 suppliers. That’s usually considered a successful lending program, but to interact with more suppliers, integrate with an ERP, or offer enhanced reconciliation data, banks don’t usually have the technical resources, because it’s beyond their traditional lending model.

Incorporating the New

Bank business models usually focus on building and maintaining a vast merchant acceptance network. You can walk into tens of millions of locations worldwide and if they have the Mastercard or Visa logo, you can use your credit card there, no questions asked. But when it comes to payments for suppliers, the acceptance network is inconsistent. Some suppliers don’t accept payment by card, or only accept them from certain customers depending on speed of payment, the margins, and the type of product that they’re selling. Due to these factors, paying by bank-issued card requires the vendor engagement process to include finding suppliers that already accept specific card types, ensure they accept that payment type from other customers, and locate new card-accepting suppliers.

That’s where fintechs really shine, because their business models are built to incorporate a supplier engagement process aimed at getting more spend on cards. Where banks generally looking for the top 10 to 20 suppliers, which might account for 70 percent of your total spend, fintechs go after the tail—that 30 percent of spend that probably accounts for more than 60 percent of your suppliers and takes more work to get on board. Essentially, they build out a B2B acceptance network inside the credit card acceptance network.

Scaling the Mountain Towards Change

Operationalized re-engagement models are a particularly important component of this business model because most companies churn 10 to 20 percent of their suppliers each year. Within two years, business’ supplier pools are different by 20 percent from when they began, so they must reach out constantly to maintain certain payment acceptances. While banks don’t always have the capacity to offer supplier acceptance maintenance, fintechs thrive when they include those services in their business model.

There are multiple benefits of capturing tail spend on cards. For example, doing so opens the door to paying more suppliers electronically, earning businesses more working capital and a higher potential for rebates. Virtual cards come with security and controls that plastic cards do not usually possess, including single-use numbers that are tied to unique suppliers and payment amounts. Tag on reconciliation data options, and the system becomes something that benefits accounts receivable as much as accounts payable. This opens more suppliers up to the idea of accepting electronic forms of payment.

Fintechs—technology-focused by nature—build their systems with a holistic viewpoint in mind, preferring to create software that doesn’t sacrifice one business’ operations for another’s. By enhancing the system end-to-end, previously reluctant accounts receivable teams, who felt strong-armed into giving up outdated payment processes, often become more willing and interested to learn about electronic alternatives.

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Rick Fletcher is the Comdata President of Corporate Payments, where he specializes in sales, marketing and product strategy, operations, and customer service.

Nium

Nium Announces Launch of Global Digitized Payment Solution for Maritime Companies

Nium recently announced the launch of its maritime payment solution, focusing on digitized payment options for shipping companies, management, seafarers, and their families. According to information released by the leading global payments platform, the payment solution – known as the Nium Pay app, utilizes the company’s global license network to successfully integrate the technology stack for real-time payroll disbursements, vendor payments, eWallet services, and remittances.

Bernhard Schulte Shipmanagement (BSM), integrated maritime service leader, is the first to use Nium’s maritime payment solution for their Spend Management Process. The solution includes the launch of BSM branded multi-currency Visa debit cards and eWallet services for their seafarer population. This also includes a supplementary Visa card available for the seafarer’s families.

“Technology development in the shipping industry is accelerating as shipping companies and their seafarers seek modern ways of moving money,” said Gitesh Athavale, Head of Sales, South East Asia and Hong Kong. “Our maritime payments solution provides an efficient and cost-saving way for shipping company management to digitalize payments, including disbursing payroll and making vendor payments. Their seafarers benefit from a convenient and modern way to send and receive money simply or spend it on board – all through the convenience of one simple app.”

The Nium Pay app allows shipping companies to disburse salary payouts directly to seafarers’ virtual visa card accounts. Crew members can directly access their wages from anywhere in the world while at sea or inland, send money overseas, process card to card transfers, shop online, and use their Nium Virtual Cards with mobile wallets onboard through the Nium Payment Application.

“It is important to us that our crew and their families are well taken care of, especially during these uncertain times when our crews are not allowed to go ashore and cannot physically remit funds back home,” shared BSM Finance Manager, Dennis Moehlmann. “Now with this new digital payment solution from Nium, no matter which part of the world our crews are at in that moment, funds can be transferred in an instant and their families will receive the transferred money immediately on their supplementary card or their home account. This is the peace of mind we want to give to our crew.”

Through this application, Nium approaches traditional payment issues for maritime companies by combining its “Pay In” and “Pay Out” capabilities. This enables shipping companies to:

-Reduce or even eliminate the use of cash on ships through QR payments

-Launch branded e-wallets with Card Payments, Remittance, Multi Currency functionality and Travel Insurance services

-Apply exclusive rates for inter and intra company cross-border payments (fund transfers can be done regardless of Internet connectivity)

-Comply with payroll and delivery and international banking regulations, including Philippines’ Overseas Employment Administration (POEA) ruling regarding seafarer payments

-Easily track remittance payments

-Send payments in real-time

Additionally, Pay-Outs are currently being offered to more than 100 countries, of which, 65+ in real-time, available to bank accounts, Visa/UnionPay cards, and AliPay wallets.

payments

HOW TO BETTER PREPARE PAYMENTS FOR FUTURE DISRUPTIONS

A particularly virulent and nasty airborne virus, it has so far accounted for 2.5 million deaths worldwide with more than 110 million cases recorded at the time of writing. Given these numbers only represent reported incidences, the real tolls could well be substantially higher.

The pandemic has especially caught western societies on the backfoot. Unlike regions more used to infectious disease outbreaks such as Asia and Africa, the likes of Europe and North America have not had to deal with a public health threat of this kind since the Spanish flu disaster of 1918, a four-wave pandemic which is thought to have killed 675,000 people in the USA and 50 million worldwide.

Vaccinations are key to emerging from the worst of the crisis during 2021, both in terms of public health and the economy.

Regarding the latter, COVID-19 has been nothing short of a disaster. America has disproportionately suffered from the coronavirus: Not only does it have the highest registered death toll, but it is also forecast to lose trillions of dollars in revenue.

Predicting the size of the economic fallout is far from straightforward, and estimates vary tremendously.

According to a study by the University of Southern California, anywhere between $3 trillion and $5 trillion could be lost over the next two years, while economists at Harvard believe the pandemic will cost the U.S. $16 trillion, assuming it is over by this fall.

While uncertainty remains as to the exact extent of the financial damage, what cannot be denied is that the financial losses are and will continue to be enormous for years to come.

The second quarter of 2020 saw real gross domestic product in the U.S. decrease at an annual rate of 31.7 percent, the largest quarterly plunge in activity on record.

And one of the most worrying patterns emerging from 2020 is companies struggling to manage cashflows and stay afloat. Payments simply are not flowing through supply chains as they ordinarily would, an observation which is borne out by several reports and surveys.

For example, trade credit insurer Atradius reports in its annual Payment Practices Barometer that businesses across the USA, Canada and Mexico are facing widespread cash and liquidity pressures. Meanwhile, business credit information firm Cortera reported that in May 2020, large companies with more than 500 employees paid their suppliers 15.6 days late on average, up from around 10 days a year earlier.

Responding to economic disruption

So, how can companies safeguard themselves against this sort of financial disruption both now and in the future?

Paying particular attention to cash flow during times of crisis is essential if businesses are to emerge from this black swan event intact–even those that appear to be in strong financial shape, given the longevity of the demand and supply chain disruption being witnessed.

At the start of the pandemic, around March 2020, Deloitte released a series of advice papers on how supply chains can cope with the then anticipated fallout, one of these being “COVID-19: Managing cash flow during a period of crisis.”

“Given the importance of cash flow in times like this, companies should immediately develop a treasury plan for cash management as part of their overall business risk and continuity plans,” the report states. “In doing so, it is essential to take a full ecosystem and end-to-end supply chain perspective, as the approaches you take to manage cash will have implications for not only your business but also for your customers.”

Deloitte draws on lessons learned from the 2003 SARS epidemic, the 2008 global financial crash, and the 2011 Japanese earthquake, offering 15 specific practices and strategies for companies to better manage their cash flow.

15 ways to better manage your cashflow

1. Ensure you have a robust framework for managing supply chain risk.

2. Ensure your own financing remains viable.

3. Focus on the cash-to-cash conversion cycle.

4. Think like a CFO, across the organization.

5. Revisit your variable costs.

6. Revisit capital investment plans.

7. Focus on inventory management.

8. Extend payables, intelligently.

9. Manage and expedite receivables.

10. Consider alternate supply chain financing options.

11. Audit payables and receivables transactions.

12. Understand your business interruption insurance.

13. Consider alternate or non-traditional revenue streams.

14. Convert fixed to variable costs, where possible.

15. Think beyond your four walls.

*Source – Deloitte, “COVID-19: Managing cash flow during a period of crisis”

Among them is advice to extend payables–in other words, take longer to pay suppliers. However, Deloitte warns against delaying payments without prior agreement with customers, urging dialogue between both parties to ensure the supply chain is as minimally disrupted as possible.

Indeed, companies may wish to bring forward payments to suppliers if it prevents them from going out of business, the consequences of which being far costlier than using up some of your own cash reserves early.

As a supplier, offering dynamic discounting solutions for those able to pay more quickly could be a way to improve your cash flows; by using this technique, you are essentially paying customers to provide you with short-term financing. Going down this route could be expensive in the long term, but it could be the only viable option if other financing methods are not available.

Perhaps the most important, albeit least tangible piece of advice is to think outside of the confines of your own business. Rather than simply focus on your own operations, companies should think about how their actions will impact the wider supply chain ecosystem.

A further question revolves around the ways in which payments are being made.

COVID-19 has accelerated the adoption of digital and automated payment methods. For instance, according to research by digital transformation platform MX, there has been a rise in mobile banking engagement of 50 percent since the end of 2019.

The U.S. has been behind the curve on supply chain financing for quite some time. Widescale adoption of electronic, data-driven invoicing will create fluidity and working capital for both suppliers and buyers.

Responding to social disruption

Another dynamic to consider is how to mitigate social disruption.

There is already evidence that the COVID-19 pandemic has rekindled divisions within society–black and ethnic minorities are disproportionately affected by the virus, while the poorest have been hit hardest by the financial costs of lockdown policies.

While not being ostensibly linked to coronavirus, the traction gained by the Black Lives Matter movement in the U.S. has undoubtedly been heightened in the pandemic’s context.

It has also prompted major shifts in consumer and business circles: Citizens and enterprises are putting time and capital towards prioritizing diversity and inclusion.

“Supplier diversity initiatives are no exception,” states supply chain software provider GEP in its 2021 Outlook. “In 2021, procurement and supply chain leaders will need to do more–by developing new approaches to include minority-owned businesses to achieve real targets for supplier diversity.”

Indeed, hardwiring diversity and inclusion into the procure-to-pay process will help organizations respond to the social unrest of 2020. This will involve tracking and benchmarking metrics at a transactional level, and companies can start by focusing on direct spending with small and diverse suppliers.

Going back to Deloitte’s advice on thinking beyond your four walls, businesses should also monitor the revenue growth of their suppliers in order to fully assess the impact of their supplier diversity and inclusion strategies.