Once upon a time, people primarily relied on cash and paper checks to pay for goods and services. They drove to banks to move money in and out of their accounts.
But thanks to the rapid evolution of payment technology, making purchases and moving funds with a thumbprint or a click of a button is the new normal in this digital day and age.
While successful strategies in the consumer-to-business (C2B) world won’t always translate to the business-to-business (B2B) space, it is becomingly increasingly clear that businesses on both sides of a B2B transaction can benefit from some of the payment innovation that already exists in C2B.
A faster, simpler purchasing process
Buyers are well-adjusted in the electronic payments world. They’re leveraging electronic funds transfer (EFT) payments with direct deposit and auto-draft for subscription services, and paying their friends digitally with peer-to-peer mobile apps like Venmo and PayPal.
Consumers are also adopting the concept of an entire digital wallet at a steadily increasing rate.
According to a recent World Pay survey, 46% of global buyers will transition from credit cards and cash to a digital wallet, or e-wallet, by 2021.
Thanks to this new prevalence of electronic payments in the consumer world, payment processing firms have seen increased interest and even demand for this same experience in the B2B world.
E-payment benefits in B2B
Benefits abound for both parties involved in a B2B e-payment transaction, whether that’s moving money directly between accounts through automated clearing house (ACH), a virtual credit card, or soon new, real-time payment rails offered by the Clearing House.
Benefits for the payer:
- Streamlined workflow: Approval processes are simplified by enabling multiple teammates inside a company to effortlessly review, approve, query and route important payments.
- Cost savings: By making electronic payments, businesses can see up to 90% cost savings over age-old payment methods like paper checks, which carry the high cost of security and processing, material costs in elements like stamps and envelopes, and labor costs from employee time dedicated to executing the payments.
- Simplicity: Digital payments are unencumbered by the postal service and don’t have to be signed by the controller or CFO with a pen.
Benefits to the payee:
- Visibility: Knowing where the payment is in the process and when it will arrive allows for more certainty in cashflow planning. Digitized payments make this easy.
- Faster payment: Paper checks take days to process, and it can take a week or more to reach a vendor. Receiving payments in the form of virtual credit cards happens instantaneously, as will real-time ACH.
- No wasted effort: No longer will the recipient need to manually look in the mail for expected payments to arrive or travel somewhere to cash or deposit checks into company accounts.
Information security is more important than ever
As consumers have grown more comfortable with this e-payment world, they’ve also become aware of the breaches, fraud and thieves looking to cash in on their personal and financial information. They are taking the extra step to ensure that each payment method they’re involved with is safe and secure.
It may surprise some to learn, then, that the riskiest payment method in today’s intimidatingly tech-savvy world is the most antiquated. According to the Bureau of the Fiscal Service, “you are 125 times more likely to have a problem with a paper check than an electronic payment.”
Companies that process physical payments from individual or business customers often keep card information on file, adding susceptibility to hackers on top of the risks that already come with many hands touching a paper check as it makes its way from point A to point B.
Similarly, buyers and procurement teams often attempt to manage account numbers for the accounts of their suppliers. Not only is this costly, it adds risks as those account numbers must be protected.
But e-payment options can leverage sophisticated security processes like encryption and tokenization, which replace card details with randomly generated numbers, to add an extra layer of protection to critical customer information.
The PCI Security Standards Council has compliance standards for all tokenization systems, including strong security measures for card data; a secure, trusted internal network; and standardized alerts for any risks. Tokenization also comes with a low cost and end-to-end security – big bonuses as businesses place big bets on electronic payments in the B2B world.
E-payment consumption insights can inform important business decisions
Services like Square make data collection from e-payments simple for businesses, providing them with customer insights that can inform key decisions for efficient use of vendors, faster access to funds, and full visibility into the ROI on goods.
The same is true for the B2B market – especially in the procure-to-pay process. Businesses are learning how to survive in the B2B world with data and automation to help make the right buying decisions.
Businesses must choose vendors and services to help them maximize growth and minimize product costs. Using data and research to make the right vendor decision is essential to maximum growth and minimum cost.
Digital transformation can be a daunting proposition for many companies, especially with technology continuing to evolve at such a rapid pace.
To learn more about the emergence of disruptive technology in the B2B financial space, download the latest whitepaper from AvidXchange and Levvel Research, which explores companies’ familiarity with how innovations such as AI, machine learning, big data and blockchain are changing the way they work.
And if you want to see how accounts payable automation solutions can integrate directly with your accounting system to optimize your enterprise resource planning in this digital era, schedule a demo with us today!