Account-to-Account (A2A) A Highway For Faster B2B Payments

Think paper payments are finished? They aren’t. For a great many businesses, that’s gone from an irritating fact of life to a matter of life and death — and time’s up for cash-starved businesses.

And in regards to B2B payments, it’s doubly frustrating. “Making business-to-business payments today is unnecessarily complex, extremely time-consuming and error-prone. This is especially true when businesses pay suppliers with paper checks,” Transcard CEO Greg Bloh told PYMNTS.

“It doesn’t have to be this way. Account-to-account payment solutions simplify and automate the exchange of payments and payments-related data between buyers and suppliers. The technology accomplishes this by digitally connecting buyers and suppliers through their banks and their enterprise resource planning applications, while providing an online business directory,” Bloh explained.

The elegance of account-to-account (A2A) payments and their use as a B2B cashflow fix is at the heart of PYMNTS’ Next-Gen AP and AR Digitization Report, a Transcard collaboration.

Cashflow Troubles Are Ancient (Like Paper Checks)

Cashflow problems aren’t part of any flu mutation; they’re as old as commerce itself. But COVID-19’s uniquely devastating economic effects created special challenges.

Companies now face the imminent decision as to how they will increase reserves without being out of pocket for costly systems and time-consuming integrations they can no longer afford. It’s coming down to this: digitize or die. Too harsh? Try this: will that be paper or platform?

“Investing the time and effort to print, mail and deposit checks may seem unnecessarily complicated when companies can simply push funds from one account into another,” according to the latest Next-Gen AP and AR Digitization Report. “This revelation is prompting more businesses to consider abandoning paper-based processes in favor of digital payments with account-to-account functionality. Firms can adopt strategic tools that automate accounts payabe (AP) and accounts receivable (AR) processes and integrate with enterprise resource planning (ERP) systems and bank accounts to facilitate these quicker A2A transactions.”

As the report notes, A2A solutions give treasurers confidence that digital payments are easy to make and will arrive on time in preferred ways, accompanied by the right data for speed and accuracy.

Gainful Acronyms: B2B, A2A, RTP

When the COVID chapter of American life is written someday, it should mention that B2B payments — notoriously slow and inaccurate — were greatly upgraded during this time.

The Next-Gen AP and AR Digitization Report observes that real-time payments (RTP) rails are getting more B2B use than ever in the aftermath of the pandemic. “A recent report noted that the use of such payments for B2B transactions increased by 12 percent in Q2 and Q3 2020 alongside a surge in consumer transactions. This indicates that more and more businesses are adopting digital payment methods and moving away from the paper-based or manual payment processes they have used for decades,” per the report.

As Greg Bloh said, “A2A solutions eliminate the friction in the payments life cycle that delays cash flow. As a result, suppliers can achieve lower days sales outstanding, reduce aging balances, [incur] fewer customer disputes and write-offs and [deal with] less bad debt. Eliminating friction in the B2B payment life cycle opens the door to accelerated payments through early payment discount opportunities. This is music to a treasurer’s ears, regardless of the economic climate.”