Automating B2B Payments Helps Firms Navigate Uncertainty

You wouldn’t do something by hand when a computer could do it better, would you? What about wait an extended period of time when a more streamlined way was available?

For many enterprise businesses, that’s exactly what they do when it comes to B2B payments: rely on manual, outdated and inefficient methods.

The common reason? It’s what they’ve always done, and how their accounts payable (AP) and accounts receivable (AR) teams have always operated. Except that, in an uncertain operating landscape increasingly defined by digital transformation, the traditional and incumbent methods of processing payments no longer cut it.

But with the news Tuesday (July 30) that B2B payments platform Monto has emerged from stealth with $9 million in funding, while expense solutions firm Emburse announced that same day that it has teamed with AP company Finexio, trading in manual processes for the benefits of a digital B2B payments ecosystem is key for businesses looking to drive greater value out of payments.

Efficiency and cash flow are the lifeblood of modern businesses, and automated B2B payments are a shaping up to be a critical enabler of this efficiency. Embracing this shift is proving to be not merely a technological upgrade to a process that was historically cumbersome and prone to errors, but also a strategic necessity for companies aiming to remain competitive.

Read more: Automation or Information? Reducing Uncertainty in a Changing Business Landscape

The Strategic Imperative of B2B Payments Automation

Traditionally, payment processing has been a labor-intensive task, involving manual workflows including data entry, verification and reconciliation across both AP and AR functions.

“The procure-to-pay process has traditionally been super manual and heavily reliant on things like paper … Anyone who has ever sat in an accounts payable seat will tell you that the data entry is probably the biggest burden,” Melissa Johnson, head of operations at Ottimate, told PYMNTS in an interview posted Tuesday, noting that many companies still manage using outdated and fragmented systems.

Digital payments “are at least 14 times more cost-effective than paper checks,” Johnson added, pointing to the efficiency and security advantages of electronic transactions.

But despite the clear and growing benefits of B2B payments automation, only 17% of enterprises have largely automated their source-to-pay cycle. This means that the majority of B2B businesses are still reliant on manual processes that are not only time-consuming but also susceptible to human error, leading to delays and inaccuracies that can disrupt cash flow and financial planning.

PYMNTS Intelligence data has shown that almost half (45%) of small- to medium-sized businesses (SMBs) point to manual invoice review as a problem when making payments, with 19% saying it was their main issue.

“Corporations in America are using some very old, very reliable monolithic systems to manage their treasury function, in this case, their AP processes that decide who to pay and how to pay — and they’re still relying on those workflows,” Ernest Rolfson, CEO and founder of payments-as-a-service solution Finexio, told PYMNTS.

Read more: Digital Payments for Improving Cash Flow and Customer Experience

Automated B2B payment systems revolutionize this landscape by reducing the need for manual intervention. These systems can process large volumes of transactions quickly and accurately, ensuring that payments are made and received promptly. This speed and accuracy are crucial for maintaining smooth operations, particularly in industries where timely payments are essential for maintaining supply chains and customer relationships.

Unlike traditional systems, which may struggle to handle increased transaction volumes or new types of payments, automated systems are designed to be scalable and flexible. This scalability means that as a business grows, its payment system can grow with it, handling more transactions without a significant increase in cost or complexity.

This is particularly important for companies expanding into new markets or regions, where they may encounter different payment methods and regulatory environments. Automated systems can even easily be configured to accommodate these regional marketplace nuances, ensuring that the business can operate everywhere.

At the same time, as businesses increasingly digitize their operations, security concerns have become paramount. Automated payment systems are frequently equipped with advanced security features designed to protect sensitive financial information and make it difficult for malicious actors to compromise the system by leveraging innovations such as detection algorithms able to identify suspicious activities, such as unusual payment patterns or attempts to access the system from unauthorized locations.