SMBs Struggle to Overcome Four Business Payments Frictions

As eCommerce evolves, many businesses find themselves struggling to keep up with client and customer demand for frictionless payment experiences.

Whether a platform is powering a consumer-facing marketplace or a private buyer-to-supplier mobile payment app, simplifying payments aspects that can range from accounts payable/accounts receivable (AP/AR) integration to transaction monitoring is key for cementing the loyalty of small- to medium-sized businesses (SMBs) looking to platforms that will support growth.

The range of payments frictions that can impact user experiences and hinder business growth are numerous, according to the “AP/AR Quick-Start Guide,” a PYMNTS and Plastiq collaboration.

Get the report: AP/AR Quick-Start Guide

Identifying Problems on the Payor Side

Payors and receivers have gotten used to friction unnecessarily, Plastiq Chief Operating Officer Stoyan Kenderov told PYMNTS in an April interview.

Read more: How All-in-One Platforms Can Lower the Cost of SMB Payments

Many smaller firms think they are using a flexible solution when paying their vendors — namely through credit cards or bank accounts, Kenderov said. They’re still a little in the dark about how they can accept payments across platforms regardless of how their buyers want to pay.

“The problem is not going to go away by itself,” Kenderov said. “It is unlikely that vendors are going to retool and rethink their payments operations because they are mostly oblivious to the problem on the payor side.”

User-Friendlier Solutions

The PYMNTS report highlighted four pain points that platforms should guard against if they want to attract and retain customers.

• Manual invoice review. To solve this problem, platforms can give clients access to a one-card solution that offers its own or integrated AP/AR management system during onboarding. That means that payments and invoicing can be organized through a single dashboard on Day One.
• Lack of financing alternatives. Allowing platform clients to choose their preferred method of payment for each transaction provides them with flexibility and eliminates the need to search for a payment type that works for buyers, suppliers and customers at the same time.

• Inability to scale. AP/AR automation saves time and resources while making it easier for businesses to scale efficiently. Introducing automation before growth becomes unmanageable is a smart way to avoid productivity drain when rapid growth makes manual AP/AR management costly and time-consuming.
• Awkward enterprise resource planning (ERP) integration. PYMNTS’ data shows that most supplier concerns were associated with frictions in resource planning: 40% cited issues in anticipating when payments will arrive; and one-third are concerned with invoice approval processes. Smart contracts using automated payment requests and contactless payments via QR codes can allow invoicing, payments and AP/AR reconciliation to occur seamlessly.

The report also noted that a payment hub or an all-in-one payment solution allows transactions to happen seamlessly by prioritizing payment preferences for both sides of the transaction.

While SMBs have access to a range of payment options, the ability to customize payment methods and gain access to funds quickly, regardless of the sending method, is key to optimal cash flow management and accurate financial forecasting.

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