WEX President On What’s Driving The B2B Payments Buzz

After decades of sluggish evolution, the B2B payments landscape has finally come to embrace a moment of accelerated innovation. While organizations large and small may be moving the needle on B2B payments digitization out of necessity in today’s climate, chief financial officers (CFOs) are using this opportunity to explore how to take these modernization efforts further into optimization.

Service providers are paying close attention, introducing new features and functionality to improve the business user experience across multiple points in the payment flow, for both buyer and seller.

Their work appears to be paying off, too. Recent news of AvidXchange’s plans to take its accounts payable (AP) automation technology public, as well as Amazon Business’ sales milestone, reflect an industry-wide evolution, according to WEX Corporate Payments President Jay Dearborn.

“We see it in our own numbers that over the past year, B2B payments spend has really risen dramatically through all of our channels,” he told Karen Webster in a recent interview. “And what’s driving all of this is the need to digitize the back office.”

Dearborn reflected on some of the latest buzzworthy events in the B2B payments landscape, digging deeper into what they mean for CFOs and their service providers moving forward.

Going Public

This week, reports emerged that AP automation technology firm AvidXchange was headed toward an IPO. The company would follow suit with other B2B FinTechs doing the same, including accounts receivable (AR) technology partner Billtrust, which released its first earnings report this week since going public via SPAC in January. AvidXchange is said to have a $7 billion valuation, reports said, more than triple its estimated $2 billion valuation in April of 2020.

It’s a testament to just how quickly the corporate payments landscape has been forced to evolve over the last year, said Dearborn. But on a deeper level, the success of technology firms is also supporting a more complex shift in the way CFOs are approaching digitization and embracing the tools that make it happen.

After all, AP and AR automation technologies have been on the market for years. But only recently have finance leaders decided to examine how these innovations can drive connectivity between AP and AR departments, and between buyers and suppliers. “What’s changing is the demand profile for these tools, which is actually a virtuous cycle that allows those tools to innovate quicker,” noted Dearborn.

The Amazon Business Effect

If there were any doubts about the impact of the pandemic on digitizing B2B commerce, they were quashed by Amazon Business’ latest figures. The company reported that it has now hit $25 billion in global annualized sales, pointing to enterprise and government customers as key drivers of that growth.

Dearborn noted that this rise in B2B eCommerce volume also introduces a new opportunity to drive that AR-AP connectivity, with marketplaces operating as the keystone in the middle. As such, these platforms can be highly influential in how the B2B transaction occurs, whether it’s a physical or virtual commercial card, ACH or otherwise.

This trend also presents an open door for industry collaboration between technology providers on both the AR and AP side of B2B transactions, with Dearborn highlighting the growth of WEX’s commercial payment volumes not only in its direct-to-corporate channel, but also in its channels that offer technology to corporates via financial institutions (FIs), as well as through embedded offerings for third-party technology portals.

Industry cooperation can empower marketplaces like Amazon to continue offering an optimized front-end experience, while enabling FinTech partners to drive further digitization of B2B transactions on the back end, Dearborn said.

Driving Progress Further

Even amid rising transaction volumes seen on B2B payment and commerce platforms, the ecosystem still has plenty of improvements to make. Dearborn highlighted the exhausting resiliency of the paper check as a prime example of just how difficult it can be to ignite change.

Cross-border corporate payments is another arena in which innovation has been historically lacking. This is due to two key pain points, said Dearborn: a high cost, attributed to the many hands that play a role in moving funds throughout the correspondent banking system, as well as sluggish speeds.

“We’ve known for a very long time that it’s broken,” he said of the cross-border payment conundrum. “Both of those [friction points] are ripe opportunities for innovators in the B2B payments space to go and capture.”

Discussions continue about the opportunity for central bank digital currencies (CBDCs) to potentially disrupt the cross-border B2B payments landscape. According to PYMNTS’ Innovating Cross-Border Payments Report, nearly one-third of U.S. and U.K. firms are planning to automate their cross-border receivables over the next three years – which means FinTech solutions will continue to be in high demand.

As CFOs ingest those technologies, Dearborn said the ecosystem must continue to foster a mindset shift in what it means to digitize. The goal of adopting AR and AP automation tools isn’t merely to replace the job of a human. Rather, it’s to automate mundane tasks, connect systems and business partners through data, and empower finance leaders to focus on more strategic initiatives.

“You’ve got people, you’ve got technology, and you’ve got the processes that pull all of it together – and you have to reinvent all three,” stated Dearborn. “The friction to go through that transformation is continually lowering as more and more businesses embark on that journey.”