5 Technology Trends in Business Payments
What will bring business payments up to date?
Companies have been quick to respond to the global increase in C2C and B2C payments for consumers, with a whole array of options which make completing online transactions simple and stress-free.
But the business world has, until now, been slow to catch up.
The sheer size and complexity of the B2B market have long been blamed for its staying behind the times. The amount of money changing hands within the business sphere is an almost unlimited sum, and because of this, requires more complex solutions which take longer to implement.
Add this to the difficulties arising from international commerce and you can understand why so many companies still use analog solutions for their payment needs. In fact, 51% of payments are still being completed by check (AFP Electronic Payments Survey 2016).
The business landscape is constantly changing, but despite this, businesses are beginning to demand the same amount of speed, convenience and flexibility in their payments systems as they have become used to as consumers.
But with business transactions constantly growing and shifting (even within a small company, thousands of suppliers might be affected), this has proven to be a difficult task. Here are some of the trends in B2B payments which will offer improvements to the industry.
Image Source: Consumer P2P
The blockchain is a distributed ledger which digitzes every transaction and shares the entire document securely. This removes the ability for any one person to make changes to the data and creates an incorruptible and transparent system.
As the use of blockchain becomes more widespread, much of the complexities within international business payments will be removed.
International payments are historically difficult, with payments having to chart a course through international rules and regulations, different systems and expectations. The blockchain is still in its infancy, but if fully accepted, could significantly change the landscape of B2B payment systems.
2. Faster payments
Despite many consumer systems appearing to offer immediate payments, many banks can still take 2 days to process payments. Delay is more accepted within business payments which often take place internationally, across different systems and for huge sums of money.
But despite this acceptance, it still causes headaches for business owners and affects the bottom line.
Banking organizations are slowly increasing their one-day payment options, due to changes in financial regulations around the world, which is making moving money safer and more timely. This will reduce the impact on businesses and free up time and labor.
3. Fully automated payments
Automatic payments still only account for 25% of business transactions, with many companies fearing that automated payments will be expensive and time-consuming to set up. But with many more companies adopting automated payment systems, they are becoming more and more commonplace and those that don’t move with the times will soon be left behind.
Moving over to fully automated payments will reduce labor costs and speed up transactions, and allow more comprehensive reporting within the organization. Fully automated payments offer clear benefits to both the buyer and supplier.
4. Procure to Paid
Traditional procure to pay systems only take the process to the point of invoice approval, at which stage the transaction is handed over to accounts department to deal with. This missing step is the most crucial to the success of the transaction.
The payment stage is often the most difficult, with companies operating on different time scales and with alternative expectations. Adding payment automation to the procedure ensures that the procure to pay system is complete from the start and saves time and energy at the point of payment.
5. Fintech banks
Changes within financial regulations could mean that financial tech companies can offer lending capabilities, transforming the global financial marketplace. Opening up banking capabilities to technology giants such as Facebook and Apple could see much heavier investment and innovation in developing solutions for B2B financial transactions.
With social media giants already offering P2P payment solutions (Facebook Messenger and Snapcash), going so far as to offer full banking services seems like the next logical step.
The complexities within the business payment industry are clear, but they are not insurmountable, as technology once again comes to the rescue with innovative companies creating new solutions to age-old problems.
As manual gives way to digital, and expectations and demands increase, businesses and financial organizations will begin to align their capabilities with those seen in the consumer sector. And not a moment too soon.