Businesses are attempting to keep up with a world where staying competitive requires embracing digital-first approaches to not just conducting day-to-day business but also sending and receiving payments. Digital payments have essentially gone from being a “nice-to-have” to a “must-have” for businesses globally. Experts estimate that at least 80 percent of the overall business-to-business (B2B) sales cycle is set to become digital and remote in the near future, and firms are also looking to expand into other markets as commerce becomes more global. This ongoing B2B payments digitization trend has intensified over the course of the pandemic. Businesses that did not move to digitize their accounts payable (AP) or accounts receivable (AR) processes before the crisis are now racing to catch up as swiftly sending and receiving payments digitally is now essential for companies looking to stay afloat.Forty-nine percent of firms that still use manual AR processes are now more motivated to move to digital processes, in fact.
This shift comes at a time when there is significant interest in accessing and offering innovative payment experiences, such as receiving instant payments and being able to make digital disbursements, for example. This makes ensuring one’s payment processor can allow businesses to keep pace with these developments key, especially because the pandemic’s impacts on firms’ B2B payment needs are likely to be permanent. The majority of B2B buyers now expect purchasing experiences that mirror those of business-to-consumer (B2C) transactions. Millennial decision-makers at firms who have an affinity for faster, mobile payment experiences as well as the use of innovative payment options such as virtual cards are driving this expectation. These shifting generational preferences – combined with the pandemic’s continued influence on global B2B commerce – appear to be boosting the adoption of more innovative payment solutions.
This means businesses today need to offer and support quick, innovative B2B payment experiences that go beyond paper-based payment and invoicing processes, and they will need the proper tools to do so. Examining the role of their payments processors and how they may be tapping technologies such as artificial intelligence (AI) and machine learning (ML) to reduce frictions or boost the speed of incoming and outgoing funds could motivate companies to strive for faster B2B payment automation. AI can also help firms better analyze and sort payments data — eliminating cumbersome manual payment processes — as well as enhance their payment processing overall. Application programming interfaces (APIs) are also gaining traction as a key technology that will make digital payment processes swifter and more efficient.
Modernizing legacy infrastructure and manual payment processes via APIs and AI can allow businesses to offer innovative payment experiences. Utilizing virtual cards for B2B payments can speed payments and add security, for example, as these cards generate single-use numbers specifically for businesses’ vendors, reducing transaction risks. They can also enable firms to more successfully compete in the expanding global B2B space, where cross-border B2B payment volumes are expected to reach $35 trillion by the end of 2022. Virtual cards may well prove ideal for firms over the next few years, especially as the frictions associated with outdated payment methods grow more cumbersome and costly even for businesses making domestic payments.
The Innovating B2B Payments Report, a PYMNTS and i2c Inc. collaboration, examines these and other trends in detail, analyzing how the pandemic has accelerated the need for B2B payment automation. It also analyzes the critical role payment processors play within this space as well as how technologies such as AI, APIs and virtual cards can optimize businesses’ payments and cash flows and add efficiency and security to their digital B2B payments processes.
To learn more about digital B2B payment innovations, download Innovating B2B Payments report.