What’s holding your business back from automating its business-to-business (B2B) payments?
For many businesses, myths have delayed or prevented them from migrating away from antiquated paper checks to frictionless digital payments made via an account-to-account (A2A) solution.
The business case for automating B2B payments is proven and compelling. Delaying a migration away from paper checks poses dangers far beyond operational inefficiencies. It puts businesses that stick to their old ways of making and receiving payments at a significant competitive disadvantage.
Has your business fully optimized the way it makes and receive B2B payments?
If not, here are common myths and misperceptions about automating B2B payments that may be holding it back.
Payment inefficiencies can delay delivery of goods of services, strain trading partner relationships, disrupt cashflows, and stunt or even stop business growth.
But traditional approaches to business payments are inefficient. Resolving order and pricing discrepancies is burdensome for buyers and sellers. Buyers must conform to each supplier’s invoice and payment processes. Payments must be manually reconciled.
Compared to paper checks, B2B payments made and received electronically through an A2A solution cost less, create fewer errors, provide better visibility, and are less likely to be bogus.
Processing checks, matching payments to open invoices, and reconciling accounts make accounts receivable an expensive function.
Things are not much better in accounts payable. Much of an accounts payable pro’s day is wasted on manual tasks. Paying a supplier with a paper check can cost 30 times more than an Automated Clearing House (ACH) transaction, NACHA research finds. And compared to electronic processes, manual payment processes costs $22 more per transaction.
What’s more, leading A2A solutions incorporate integration tools and a centralized business directory that facilitates a fast migration to electronic B2B payments, with minimal IT involvement and little disruption to existing payments processes.
60% of corporate treasurers
say manual processes are their
In fact, manual reconciliation is one of the biggest burdens in accounts payable and accounts receivable departments.
Treasurers from large corporations to small businesses are looking for ways to streamline their finance operations. Receiving electronic payments through an A2A solution is one way to accomplish this.
By connecting buyers and sellers through their banks and ERP platforms, transactions can flow touch-free within seconds of being initiated with the rich remittance data and other information that a supplier needs to apply cash -- music to a treasurer’s ears!
No one is happy with the way the business payments get done. Seventy-two percent of buyers experience stress, delivery delays and damage to supplier relationships because of inefficient invoice and payment processing.
Accounts payable professionals spend their days bogged down by a seemingly endless list of repetitive manual payments tasks while trying to manage dozens of business rules, best practices, auditor guidelines, and regulations for how suppliers should get paid.
Meanwhile, slow check payments result in stakeholders across the enterprise receiving lots of phone calls and e-mails from frustrated suppliers about the status of their payments.
Stakeholders will be happy to hear that electronic payments made through an A2A solution are easy to initiate, can arrive within seconds of being initiated, and completely transparent.
Delays in approving and processing business payments can disrupt cashflows. The inefficiencies and mail float associated with paper checks is a big cause of payment delays.
91% of B2B merchants in the United States experience
late payments by their B2B customers
That is one reason that many small businesses rely on short-term financing solutions to get paid. And late payments are a contributor to the 50,000 small and mid-sized businesses that fail each year.
B2B payments made via an A2A solution can arrive within seconds of being initiated and arrive with the rich remittance data necessary for touch-free application and accurate reporting.
Seventy-nine percent of finance executives seek more accurate cash data and forecasts. But paper processes, closed-loop systems and a lack of ERP integration make it difficult for buyers and suppliers to know where things stand with their payments.
It is hard to accurately forecast cash needs. Buyers can never be sure when checks will be deposited. Similarly, suppliers can never be sure when a check will arrive – and service cuts to the U.S. Postal Service make it harder. All this unnecessarily stresses working capital.
Leading A2A solutions provide integration tools for connecting to any bank and ERP or accounting system with minimal IT involvement.
The high cost of check fraud has been well-documented. But checks are not the only vulnerability with traditional approaches to business payments. Business have lost a total of $3 billion from payments made to fraudsters through business email compromise.
Bad actors are getting better all the time at impersonating legitimate suppliers and payment approvers. What is more, sharing and maintaining supplier bank account information is risky.
Having large amounts of cash on hand to pay for deliveries puts the security of a buyer’s receiving staff at risk. And carrying lots of cash and checks puts drivers at risk.
A2A solutions mitigate the risk of payment fraud. A centralized business directory validates a supplier’s identify. Unlike paper check payments, real-time payments (RTP) cannot be intercepted or whitewashed. RTP is a safe alternative to keeping lots of cash on your loading dock for Cash on Delivery (COD) orders.
Electronic invoices offer more security than e-mails. Audit logging and tracking of all A2A transactions enables buyers and sellers to identify suspicious activity. And role-based access, data encryption, multi-factor authentication and other security measures keep fraudsters out.
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