Before the pandemic, over half of business payments were done by paper check.
But that iceberg of inertia that was freezing innovation within B2B payments is slowly starting to melt under the heat of new necessities around enhancing liquidity and improving cash flow visibility.
Payments industry executives told PYMNTS that the four themes that defined B2B payments’ transformation in 2023 were speed, security, artificial intelligence and tooling.
And those four trends will continue to reshape the commercial transaction landscape in the year ahead.
The past year’s ongoing economic uncertainties helped drive an increased emphasis on visibility and certainty around cash flow, areas that manual and legacy methods struggle with.
See also: 21 Payments Execs Reflect on 2023’s Strategic Shifts
One thing PYMNTS heard repeatedly throughout the year is that business customers are now starting to expect the same, seamless and technology-driven experience in B2B transactions as they receive in their day-to-day lives as consumers.
“All the innovation that’s happening in the consumer space will move into the B2B world, as well,” Anu Somani, senior vice president and head of global payables and embedded payments at U.S. Bank Global Treasury Management, told PYMNTS in October.
Particularly as behavioral — and generational — shifts reshape the B2B ecosystem, providing a higher level of digital ease, convenience and visibility over B2B payments is becoming increasingly crucial.
“In general, business customers are no longer accepting of the clunky manual processes long associated with B2B accounts receivables,” Shawn Cunningham, managing vice president and head of Capital One Trade Credit at Capital One, told PYMNTS in October.
Organizational leaders are starting to wake up to the inefficiencies woven into B2B payment workflows. Invoicing, reconciliation and even the application of cash are riddled with manual touch points, paper and a general lack of clarity.
“As 2024 dawns, we’ll likely see an increasing number of providers broaden their payments services for buyers to help hasten the shift away from the paper check,” Chris Wyatt, chief strategy and product officer at Finexio, explained to PYMNTS in October. He projected that the use of virtual cards will proliferate and be tied to enterprise resource planning and accounting software so that reconciliation is automatic and error-free.
“There are three themes [around B2B payment innovation] we’re seeing: payment velocity, tooling and the role of artificial intelligence,” Nick Izquierdo, executive vice president of payments at Billtrust, told PYMNTS in November.
“We’re moving beyond simply ‘kill the check,’” Ingo Money CEO Drew Edwards told PYMNTS in November.
Read also: The Trickledown Consumerization of B2B Payments Helps Firms Win Business
The faster movement of money is also seen as a crucial factor in navigating the economic landscape, especially in times of prolonged uncertainty where faster transactions fulfill the strategic imperative of enhancing liquidity and improving cash flow visibility.
“B2B payments is the one payment area that lags everything else,” Tom Randklev, global head of product at CellPoint Digital, told PYMNTS in November.
“[But] innovation in B2B payments is heating up, and it’s centered around the ongoing digitization of the space, which brings a lot of optimization around operational efficiencies, cost efficiencies and just a better way of moving money,” he added.
“What makes B2B payments such a great market is the presence of true white space, which is rare in payments today,” Ben Weiner, senior vice president and global head of B2B payments at Nuvei, told PYMNTS in November.
While B2B transactions are historically more complex than consumer transactions, the biggest problems frequently equal the biggest opportunities — and advances in cloud-based systems and other enterprise solutions are increasingly making integrating new B2B payment technologies a must for savvy organizations.
“There has been so much innovation … we’ve seen a proliferation of so many different payment options around things like speed, terms and visibility,” Flock Freight Chief Financial Officer Pat Dillon told PYMNTS in November.
“[B2B innovation] requires integration, and none of it is as quite as easy as you would hope it to be — but it is definitely an area where there is a consensus that moving the ball forward is a win-win for everyone,” he added.
Today’s modern and advanced B2B payment platforms are not one-size-fits-all solutions; instead, they provide a toolkit for businesses to customize their payment interactions. However, that doesn’t mean integrating them is as easy as one-two-three.
“People are afraid of new payment rails and deviating from the script,” Doug Brown, president of NCR Voyix Digital Banking, told PYMNTS in November. After all, “payments are a very complicated ecosystem.”
It’s hard to innovate and gain the full benefits of modernization initiatives when new digital experiences “crash into 30-year-old technology stacks,” Form3 CEO Mike Walters told PYMNTS in November.
Echoing that sentiment, Connatix CFO Joe Pergola told PYMNTS in November: “There’s a lot of innovation, but I think the entire ecosystem needs a lot of investment to speed things up.”
But change is on the horizon. Legacy systems are giving way to modern, cloud-native platforms that facilitate seamless, real-time transactions. The elimination of paper-based methods and the adoption of digital processes bring unprecedented efficiencies, reducing operational costs and enhancing overall transaction speed.
“B2B payments is a very hot area right now,” Seth Goodman, chief revenue officer at Boost Payment Solutions, told PYMNTS in November.
“[T]he movement of money is fairly commoditized,” he added. “The real value add is in the automation and the reconciliation.”
“There is value in convenience; it makes customers more sticky,” Eric Foust, vice president of banking partnerships in North America at Trustly, told PYMNTS in November, noting that there can be a cost-to-utility value trade-off when it comes to certain B2B payments innovations.
Particularly as the market evolves and matures, “if businesses aren’t focused on what’s next, they are missing out,” he said.
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