Making money move: The impact of FinTechs, innovation, and digital technology in B2B payments

Making money move: The impact of FinTechs, innovation, and digital technology in B2B payments

The ability to digitise and automate business systems and processes has driven the transformation of B2B payments in recent years. From being able to process card-not-present transactions to integrations that make payments and the associated accounting and administration processes seamless, innovation is catching up to B2C channels. Worryingly, however, adoption lags.

As rising interest rates and inflation place continued pressure on companies to perform, it’s an opportune time for leaders to optimise business systems and processes and address persistent problems, such as late payments.

Invoicing and payment processes are critical areas to which leaders should pay more attention towards. Addressing friction in these processes will strengthen cash flow, improve payment security, and provide the data and technology to strengthen commercial decision-making. Further, solutions that offer on-demand lending products, tech-driven invoicing, and payment processes can also boost cash flow across the supply chain.

FinTech is shaping the future of B2B payments

While business leaders often understand the importance of implementing the latest technology, the resources required to make these changes have put digital transformation projects on the proverbial back burner. That was until early 2020, when COVID-19 made it necessary for businesses to move online quickly.

By early 2021, 53 per cent of B2B companies had established eCommerce capabilities, growing to 65 per cent in early 2022. Despite the accelerated pace of digital transformation in recent years, the customer experience in many digital B2B buying channels fell flat. Almost 75 per cent of B2B buyers experienced problems with a recent shopping experience on a supplier’s website, and 90 per cent would buy from a competitor if a supplier’s digital channels weren’t keeping pace with their needs.

The statistics indicate customers’ high expectations when it comes to digital B2B buying. It also shows that having a seamless digital buying experience is now the bare minimum expectation. People are used to this in B2C channels and expect the same array of payment options, integration and automation, and intuitive experience they are accustomed to in B2B transactions.

Streamline B2B payment processing for powerful business transformation

Currently, 47 per cent of the total value of B2B sales on credit remains unpaid by the due date — an alarming statistic, especially with some businesses having to resort to not paying their suppliers to preserve capital.

Integrated payment solutions are revolutionising B2B transactions and addressing the late payments problem at the root. These solutions enable customers and suppliers to collaborate on each transaction. For example, with an integrated payments platform that offers embedded point-of-sale financing capabilities, a supplier can get paid upfront and on time while the customer can choose to pay at a later date, or in instalments. It’s a win for suppliers suffering the impacts of late payments and reduces the risk of offering customers trade credit.

Similarly, customers are more motivated to pay on time when they don’t need to pay for transactions in one lump sum. This is particularly powerful for purchases of revenue-generating goods and services as the income generated from the purchase can be used to cover the repayments, preserving working capital and strengthening cash flow.

Beyond the financial, a range of strategic and operational benefits can be gained from streamlining B2B payment processing. These benefits include reduced administration time, more accurate data, and more time for your people to spend on high-value tasks, to name a few.

Leverage technology to improve cash flow management

FinTech tools, which provide a single source of truth for data and drive innovation across all areas of an organisation, should be the first step in transforming how businesses make and take payments. The ability for companies to foster these capabilities can be the difference between growing cash reserves to withstand uncertainties and strategically planning investments in growth or becoming one of the 80 per cent of companies that fail due to poor cash flow.

Digital payment technologies provide real-time cash flow analysis, allowing finance professionals and commercial decision-makers to identify what levers will strengthen a company’s finances. Key features include visual analysis of cash inflows and outflows. For example, if a large expense is due soon, cash flow visualisation provides a quick snapshot of expected cash inflows and the forecasted cash position once the bill is paid.

On a longer-term basis, predictive insights provide the data to accurately plan for growth initiatives, whether it’s expanding to new markets, completing research and development projects, moving to a larger property, or opening a new location. Of course, a forecast is predicated on the assumption that inflows will occur as and when expected. This makes integrated payment technology  – that motivates customers to pay in full and on time – a critical piece of the cash flow puzzle.

Don’t forget security and compliance

There are rising instances of cyberattacks and fraud for several reasons, including an increase in attack vectors and weak security and compliance measures. With the right integrated payments provider, a company should have peace of mind that their payment data is secure.

Just like integrated technology makes it easier for companies to be proactive about their cash flow management, it encourages a more proactive approach to compliance. When implementing new technology, it’s prompt to identify what needs to be done to maintain compliance with the regulatory requirements in your jurisdiction, as well as seeing which partners can facilitate the payment process and provide expert capabilities to reduce the potential burden on in-house resources. Because new technology is enough of an investment and change exercise without creating new teams to maintain the technology.

Digital is the future in B2B payments, so don’t get left behind

As businesses embrace digitisation, especially in payments, further developments will provide more security, speed, and transparency. Blockchain technology and platform-as-a-service (PaaS) are two key areas that will make it faster and easier for businesses to transact seamlessly while having a solution that scales as the business grows. Similarly, the increasing ability of artificial intelligence and machine learning algorithms have to automate a range of business systems and processes will help businesses work smarter, not harder.

The digitisation of B2B payments will drive long-term transformation for businesses. By implementing technologies today that improve cash flow and enhance operational and strategic efficiencies, you position your business well for continued growth, even in the face of challenges that may arise in the future.