The scenario of frazzled buyers negotiating extended payment terms — in many cases having to choose who gets paid and who doesn’t — has made the whole “invoice to check to envelope to swirling vortex of the unknown” thing absurd. Who has the time for this anymore?
Legacy payment options like paper are getting nudged out by faster better methods like credit cards, which are more cost-effective for buyers’ accounts payable (AP) teams to send and quicker for suppliers’ accounts receivable (AR) professionals to receive.
PYMNTS’ July 2020 Reinventing B2B Payments Report done in collaboration with American Express looks at the AR and AP automation space from the perspective of businesses in recovery mode. It’s time for a solid path to AP modernization, and the industry gets it.
“Supplier payment acceptance was already becoming more automated and digital prior to the pandemic, compared to the more traditional approaches of ACH and invoicing,” Gunther Bright, executive vice president of U.S. merchant services at American Express, told PYMNTS.
“However, COVID-19 has been an accelerator in this space, with suppliers now shifting their operations to get paid faster, including the acceptance of credit cards for B2B payments.”
Configurable And Secure For Remote Treasury
Work-from-home (WFH) hasn’t ended for several million workers, and some percentage of them are executives of treasury departments. Their remote work needs differ from those of many professionals in that they access corporate records and work with protected information.
AP automation is stepping into the void this has created with configurable, secure systems.
“American Express recently launched one such ready-to-fold-in AP solution, which is designed to work with the accounting systems that businesses already have in place. The tool enables AP staff to avoid visiting their offices in person and instead remotely issue payments via automated clearing house (ACH) checks and virtual cards,” the Tracker states.
“Offerings like these can fill significant gaps, with an American Express survey finding that 44 percent of SMBs surveyed in June 2020 still made most of their payments manually before the pandemic.”
The Reinventing B2B Payments Report adds that, “Suppliers are also upgrading their AR operations as they work to enable faster and more fluid corporate client payments. Vendors’ heightened needs for new cash flows during the current health crisis are prompting them to smooth frictions that prevent swift payments, and encouraging digital transactions could be key to these efforts.”
A Case Study In Digital Journeys
American Express is a great case study in financial ecosystem dynamics. Seeing the integration of AP automation with new digital spending tools, the value of the strategy becomes clear.
“Over the past several years, we have been on a journey to digitize payment processes and become an essential part of our customers’ businesses through a number of ‘beyond the card’ offerings and B2B partnerships,” Trina Dutta, vice president and general manager of B2B payments automation and global commercial services at American Express, told PYMNTS.
“Through [such] innovative offerings and B2B partnerships, we are equipping businesses with the flexibility to choose multiple payment methods, including virtual card payments, checks and ACH,” Dutta said.
Payments choice is the other action, even in relatively staid corporate accounting. And while Amex is a big fish, the AP automation pool is getting bigger. Smaller fish are fast and hungry.