Enabling The B2B Payments ‘Easy Button’

Unfortunately, for both buyers and suppliers, friction and B2B payments tend to go hand in hand.

From paper checks and invoices, to phone calls to track down payments and manual processes, there are many pain points impacting the flow of transactions between buyer and suppliers.

But both Kevin Woods, EVP of global strategy and business development at AOC Solutions, and EJ House, director of operations at 3Delta Systems, agree that, someday in the not-so-distant future, digital payments will help to alleviate much of that friction.

As Woods explained, many of the problems buying organizations and suppliers are facing in B2B payment transactions start with the ERPs.

“The ERP solutions that are out there sometimes contribute to a lot of the pain points that the buyers have because they are very rigid,” Woods explained, noting that this approach doesn’t work because companies aren’t a “one size fits all” when it comes to an ERP and making payments.

While buyers are looking for an “easy button” to get their payments out the door and processed quickly and efficiently, Woods said that they know it’s much easier said than done.

But AOC Solutions and 3Delta Systems are taking steps to make the idea of an “easy button” more of a reality.

Giving Back Control

Woods said that carving the path toward frictionless B2B payments starts with giving buyers and suppliers the options that enable them to take control of the payments and the decision process on how the payments are going to be made.

“We take what the ERP offers and expand on it, providing enhancements to the buyers and suppliers themselves,” he added. This also allows AOC Solutions and 3Delta Systems to accommodate the interdependencies and address the problem many businesses face, which is continuing to do what’s always been done, even if that’s not the more effective approach.

For many companies to take a step away from the processes and payment methods they are in the habit of using — even if they are friction-filled and cumbersome — it takes an incentive to change.

“People who are day-to-day in the payments realm of the buying organizations are saying this is how it’s always been done, but if you give me something that’s easy to use, where it doesn’t add additional manual work, then I might be willing to change to that,” Woods noted.

Delivering on flexibility as part of the B2B payments solutions is also an important factor, House explained, because it allows a business to start wherever it’s at in payments so that the solution can grow with it.

Who Has The Power?

Pushing digital payments forward in the B2B payments space will take cooperation on both sides. But who is responsible for initiating the change?

According to Woods, both suppliers and buyers play an equal part. A buying organization may spend years cultivating relationships with suppliers, which it does not want to risk losing. But he noted that the company and its size also play a part in how the payments evolve.

“The buyer is in the driver’s seat, but from our perspective, the supplier has the brake because they determine how they’re going to get paid,” House added.

In many cases, suppliers dictate the payment processes they are comfortable with based on what they are already set up to accept.

“I think they have a lot of control in that environment, and because they have a lot of control, sometimes, that’s really a stumbling block for the buyers out there wishing to move to a full electronic payment environment,” House explained.

In addition, every business is different — each with their own ERP requirements in place — which can result in companies applying a stricter approach because of all the compliance requirements that they have to address, which are determined by the nature of their business.

Finding The Payments Middle Ground

B2B payments may not always be easy, but in order to make it more painless, both buyers and suppliers have to meet in the middle around a program that will make payments between them more efficient.

However, getting both sides into that middle ground can be a challenge in and of itself.

In many cases, both buyers and suppliers have been told there’s a certain way to do things where payments are concerned, and that’s what they continue to stick with.

But Woods said that providing the education about what options are available can make a huge difference in a buyer’s or supplier’s willingness to participate in something new.

“When you give them those options, they tend to want to participate more because they feel like they’ve got control, which rightfully they should,” Woods noted.

The AR-Exchange supplier portal, recently introduced by 3Delta Systems in conjunction with AOC Solutions, is a tool aimed at bringing both sides together.

Woods said that what he’s seen in the market is that businesses want a single place where their supplier organizations can go to get an update or information associated with a payment, without having to go look in multiple different places.

“It’s not just getting the information; it’s that the information provided to them is very relevant to what they need to do with it,” Woods added. “That means bringing payment information down into their AR platforms. The tools that are provided with AR-Exchange allow them to automate the data from that platform into their AR system.”

House referenced a recent survey that revealed nearly 81 percent of respondents said that it was very important to know when their invoices were received, approved and paid. The AR-Exchange supplier portal provides this capability by generating an automated notice to the supplier when their payment has been acted upon and allows them to take an action if needed.

Suppliers can access the portal by clicking a link in the email remittance or going to a secure website from either a desktop or mobile device.

“That real-time access gives suppliers comfort in knowing that their cash management is OK … and gives a lot of flexibility to manage their business because they know their cash flow is not tied up in slower manual processing,” House explained.

The Digital Push

Not only are those in the B2B payments space looking for tools and solutions with more automation, they also want the flexibility of choosing from multiple types of digital payments, if needed.

Woods said this is why many ERP solutions are beginning to support, or have supported, one-file payment extract capabilities. As he pointed out, the traditional process is more time-consuming and not very efficient when trying to reconcile all the data. “But a one-file solution can take most manual paper checks out of the equation,” Woods added, “because they are converted into electronic checks.”

Though paper checks in the B2B payments are what Woods describes as a “bad bug that won’t go away,” he also said that, as businesses gain more knowledge and realize digital payments have the same capabilities as a check (with less cost) and increased security, the usage of checks will start to decline with time.

House also noted another trend he sees on the horizon in B2B payments — going mobile.

“I really believe that we’re going to see B2B payments go mobile, where you’ve got the ability for smart devices to be used on the go to manage business operations,” he explained. “Of course, as the younger generation begins to fill more leadership roles and they’re more comfortable with electronic means and smart devices, we’re going to see that shift.”