Corporates Challenged By Digitization Beyond Vendor Payments

The announcement of Mastercard Track expanding into B2B payments last week represented a significant push for B2B payments modernization by one of the industry’s giants — and followed Visa’s own push in the B2B payments modernization space through the rollout of Visa B2B Connect in June.

With some of the biggest names in payments paying greater attention to corporate payments, businesses’ financial digitization seems to be accelerating as more service providers offer new, seamless ways to swap out inefficient infrastructure, processes and tools for modern solutions.

The past week has seen several initiatives in both the private and public sector adding fuel to the corporate payments digitization flame, while the latest industry research has also offered promising stats on businesses’ path for electronic, automated financial processes. But experts warn that there is still much work to be done, and while there is promising evidence of progress, legacy processes and technologies remain prominent — particularly within smaller businesses. Below, PYMNTS breaks down some of the numbers behind the B2B payments and finance digitization journey.

$125 trillion: the value of global B2B payments, and the figure Mastercard pointed to in its announcement of the Mastercard Track Business Payment Service. The solution, which will roll out in 2020, will aim to jumpstart businesses’ payments digitization efforts: “The business world has accelerated,” said Mastercard Executive Vice President of Commercial Products and Innovation James Anderson in a statement last week, “but the payments that enable it are stuck in neutral — paper checks and manual invoicing need to be scrapped.”

30+ markets now have Visa B2B Connect, with Visa pointing to speed and transparency of commercial payments across borders — key goals to modernize corporate transactions, the company said. The solution is built on distributed ledger technology to enable cross-border corporate transactions to settle either same-day or next-day.

500+ industry experts are collaborating for the Federal Reserve’s Faster Payments Task Force, which helped pave the way for the Fed to announce FedNow, its planned faster payments service for the U.S. announced last month. While the initiative has been met with doubt and controversy, it represents the public sector’s own focus on payments modernization — an effort that will not exclude corporate payments from disruption.

80.8 percent of businesses use checks to pay their invoices, Corcentric and PYMNTS found in their collaborative Payables Friction Index. Interestingly, satisfaction with paper checks among the 2,570 professionals surveyed is at 51.3 percent — a figure that shows businesses are mixed in their continued use of paper checks in commercial payments (despite an influx of digital alternatives).

42 percent of professionals surveyed by the Association of Financial Professionals use checks, an all-time low for the AFP’s Electronic Payments Survey, a collaboration with JPMorgan Chase. Researchers surveyed 379 corporate treasury and financial professionals and found that check use seems to be at an all-time low. However, the report warned that just because check use is on the decline doesn’t mean corporates are replacing checks with modern solutions: the majority of cross-border commercial transactions, for example, are made via wire.

2.2 million civilian employees are on the U.S. government’s payroll, a statistic the U.S. General Services Administration pointed to when announcing that it chose its partners for its NewPay effort, an initiative that includes modernizing and centralizing payroll across federal government agencies. In addition to reflecting, again, the public sector’s interest in modernizing financial processes, it also represents how payment modernization can occur beyond supplier payments, and into other areas like payroll.

46 percent of CFOs and accountants don’t track the cost of expense report processing, Certify found in its newest research, adding that the struggle to embrace technology remains a key barrier to effective travel and expense (T&E) management. Again, this points to corporates’ opportunities to modernize their financial processes beyond supplier payments.