Over the past two decades, the digital payment landscape has evolved significantly. As a result, B2B payment systems are now rapidly advancing towards more sophisticated automation, reshaping transaction efficiency and process streamlining
While the consumer market has seen rapid advancements in payment technologies, the B2B sector is also undergoing a significant transformation. Moving away from the traditional, often cumbersome paper-based processing, more businesses are adopting digital solutions in their Accounts Payable systems.
As of 2023, the average cost to process a single B2B invoice has risen to $13.11, with some estimates putting the cost between $15 and $40 per invoice. In terms of time, businesses now take around 10 days on average to process a single invoice, a slight improvement over previous years.
This improvement, however, is set against a backdrop where B2B enterprises still face an average wait of 40.3 days to receive payments, a delay that significantly impacts their cashflow and growth potential.
The adoption of the latest payment solutions in the B2B sector has been influenced by various factors. A significant one is the preference of buyers to purchase on net terms, which can increase administrative workloads for both parties involved.
And yet, nearly one-third of UK finance professionals (29%) claim late payments are one of their biggest pain points when it comes to accepting and making B2B payments, followed by costly processes (27%) and human error (26%) according to research from American Express.
“Beyond these pain points respondents believe efficiency, time spent processing transactions and cost are the three priority areas where their organisation’s B2B payment processes need improving,” says Stacey Sterbenz, general manager, UK Commercial at American Express.
Understanding and addressing these unique challenges is key to facilitating smoother transitions to advanced payment systems.
As the B2B payments sector experiences remarkable improvements and innovations, it presents an opportune moment for CFOs to re-evaluate and refine their approaches. Addressing issues such as late payments, costly processes, and human error not only enhances efficiency but also contributes positively to the overall financial health of the organisation.
Late and slow payments due to inefficient payment systems can, inevitably, disrupt cashflow, and almost half (45%) of finance professionals state that late payments lead to cashflow challenges.
These challenges can hinder business growth and technological investments, with Sterbenz saying that over half (53%) of respondents to the Amex survey cited cashflow challenges as an obstacle preventing them from investing in technology that would ultimately help with their finances and streamline the payments process.
“Failing to make those investments can end up costing businesses more money down the line and increases time spent on manual processes,” Sterbenz says. “Cashflow challenges can also impact the ability to keep business running smoothly and the extent they can plan for the future, affecting growth potential.”
The administrative burden of managing payments – due to the continued use of manual, labour-intensive processes and inefficient data quality – can also divert finance teams from its strategic activities.
“By digitising their processes, businesses mitigate these challenges by reducing the time it takes to make and receive payments,” says Sterbenz.
Integrated payments, invoice automation and digital currency are just a few of the solutions that are on offer to senior financial professionals.
Encouragingly, American Express’ research found that 69% of UK businesses have adopted (in the last two years) or are considering adopting end-to-end automated payments to reduce errors. Furthermore, 70% of businesses found that adopting new payment methods positively impacted profitability.
“Amid rising costs, creating efficiencies and improving working capital are key priorities for businesses,” explains Sterbenz.
The technology solutions that are chosen should also align with these factors, as in addition to automation, 57% of organisations having either integrated or considered using virtual cards, a digital alternative to physical cards.
Sterbenz expects to see more businesses lean on these solutions as they look to “safeguard working capital on their journey to achieving their business objectives.”
Those labelled with the title of CFO have traditionally led the finance function – a department shrouded in mystery and often siloed from the rest of the business. But over the past few years, these teams have become more intertwined with the day-to-day runnings of their business and as such, CFOs have become far more involved in operational decisions.
This includes those around adopting new technology solutions. Sterbenz emphasises that the first step in securing support for the implementing of new solutions is to communicate the benefits of any new technology, for both the business and employees.
“Whether it will make them work more effectively or increase customer satisfaction, employees will want to know why the business is choosing to bring on a new solution,” comments Sterbenz.
“Once they understand the benefits, the next stage is to ensure they have the right training to familiarise themselves with a new solution they’re expected to use. And of course, give them the time and the space to ask questions throughout the onboarding process so they’re comfortable using the technology, meaning the business will reap the rewards in the long run.”
According to American Express’ research, 60% of UK CFOs are prioritising mitigating risk related to payment fraud and security when exploring new B2B payment methods.
Cybercrime has become a top priority for organisations over the past decade, rising through the ranks to be the most cited risk by regulators when conducting risk assessments of their industries.
From sophisticated phishing attacks to widespread ransomware incidents, the cybersecurity landscape in 2022 has been challenging for UK and European businesses. A comprehensive survey conducted in 2023 revealed that 39% of UK businesses experienced a cyber-attack in 2022, with cybercrime costing these businesses an average of £4200.
“Businesses should work with an experienced payments partner that uses encryption and multi-factor authentication to protect payments,” says Sterbenz.
CFOs and finance professionals also need to ensure that all payment software, applications and systems have the latest security updates to lower the risk of such cyberattacks.
“Finally, businesses should prepare accordingly for when a cyberattack does occur. That requires developing a comprehensive incident plan that includes steps to mitigate damage, notify stakeholders and quickly resume business as usual,” continues Sterbenz.
To successfully implement the right applications, CFOs and finance leaders need to evaluate their current payment systems and manage expectations within the organisation.
Having the right tools will also allow CFOs to predict future cash flow in budgeting scenarios without having to get too involved in the details of data processing.
By implementing advanced payment technology solutions, organisations can build financial resilience, safeguard against cash flow disruptions and enable strategic investments.
From secure and efficient virtual payments to simple reconciliation processes and much more, American Express® Corporate Solutions keep your business moving. Find out more about how our payment solutions can help.
