Accounts payable (AP) is undergoing its own digital shift as companies modernize a B2B payments ecosystem that until recently was surprisingly paper-based despite five solid years of serious innovations on the part of financial institutions (FIs) and FinTech.
PYMNTS’ CFO’s Guide To Digitizing B2B Payments done in collaboration with Comdata tracks the changes in corporate treasury management that were already happening but are far more pronounced thanks to the global pandemic and its lingering effects.
“Buyers need swift, convenient ways to transact with their vendors, and many are turning to virtual card payments. Getting suppliers funds quickly has gained importance during the COVID-19 pandemic, and the time it takes paper checks to travel through the mail is not cutting it for many vendors,” the new Tracker states.
For these reasons, “Accounts payable (AP) professionals are finding it more difficult to issue paper-based payments because many employees are working from home. This has led some buyers to pursue secure digital methods when handling their … (B2B) payments.”
A Digital Trifecta
Speed, convenience, security. That’s the trifecta CFOs are seeking in the mists of the pandemic, where companies know what needs to be done, but not always how to do it. That leads to operational inefficiencies that set CFOs’ teeth grinding. So, they’re seeing to it.
“Chief financial officers (CFOs) have also been adopting digital tools to improve their companies’ supplier management and payment processes. A June survey of 250 CFOs at mid-sized to large firms found that 72 percent said their staff spend up to 10 hours per week handling new vendor registration, responding to supplier inquiries, issuing B2B payments and tackling other AP tasks,” the new Tracker states.
Additionally, “Twenty-eight percent said staff spend as much as 20 hours per week on such work. Some CFOs have been working to automate more of their financial processes since the pandemic started, and 40 percent of those who had done so said the move led to better experiences for their vendors.”
New Partners And Smarter Tools
As businesses reinvent into their post-pandemic forms, new relationships will be part of the equation. The digital route is a lighted path for CFOs facing a mountain of due diligence.
“Corporate buyers must initially research potential partners to ensure that they are operationally stable and can maintain steady flows of goods and services. Missed due dates can prevent buyers from meeting their own client commitments, after all. Carefully vetting new suppliers thus often involves examining details such their credit and performance histories,” according to the CFO’s Guide To Digitizing B2B Payments.
After that, it’s all about the Benjamins — making money — a process that comes with pitfalls and payoffs of its own in a post-pandemic economy that no one fully understands. Yet.
“Companies may be eager to ditch paper checks and other manual methods from their B2B payment flows, as 24 percent of AP professionals say that such processes worsen vendor relationships. Switching to digital transactions often necessitates more supplier details, however, as companies need to verify vendors’ bank account information to issue electronic payments made via automated clearinghouse (ACH), for example,” the Tracker states.
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