4 B2B Payments Practices To Retire In 2021

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It’s no secret that B2B companies, compared to their B2C counterparts, are typically late adopters of technology. But this year has shown us that certain technologies, like payment automation, can no longer be relegated to the back burner.

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To keep up, it’s vital to assess which payment processes weigh your finance team down and pivot accordingly so you can empower your team with the right tools. Certain technologies and trends are ideally suited to replace outdated processes in the upcoming year.

A Slow March Forward

We can point to several reasons leaders may hesitate to implement new technology — whether they fear disruption to the status quo, worry that people will reject new tools, believe that change management efforts will be overwhelming, or struggle to grasp the value of something that seems so unnecessary.

On the one hand, it is challenging to comprehend value for something you haven’t experienced. It’s not uncommon for B2B companies to resist a high price tag for a piece of technology they don’t think they need. But often, that’s because B2B leaders don’t fully understand the technological capabilities. For example, they may think that accounts payable automation is a simple process that’s been around for decades. But that’s not true.

Sure, something like invoice processing, which allows supplier invoices to be captured digitally, has existed for a while. But if that’s all a B2B leader thinks payment automation is, they’re missing out on myriad solutions available to them. Modern payment automation and accounts payable solutions not only digitize invoices — they also streamline and manage internal processes and procedures along the way.

Other times, bad past experiences can deter B2B leaders from implementing new systems in the future. Leaders tend to question why they should risk adding technology if there’s a chance it could make things worse. For example, they may have had a bad experience with an ERP solution vendor making an empty promise or failing to scope out the projects properly. When that happens, it’s easy to subscribe to the idea that you’re better off doing things the old-fashioned way.

We all get distracted by our daily routine, and B2B leaders are no different. Dealing with B2B payment errors or compliance failures is painful for that moment — but it would be unwise to assume those errors never add up. Over time, this creates a backlog of tasks that bogs down the whole team.

COVID-19: When Push Came To Shove

B2B companies may have gotten away with their slow but steady march toward tech adoption before COVID-19 hit, but as soon as the pandemic interrupted business, the rules of the game changed. Digital transformation initiatives that once had three- to five-year timelines are being executed in six months or less.

To survive and succeed, your organization must transform its underlying accounts payable solution and cost structure. Now is the time to strategically rethink how to operate and make a commitment to lasting gains.

To do this effectively, your business needs to find ways to deliver more with less and apply smart cost and working capital controls while maintaining team productivity and addressing operational risks. Technology helps make this happen in the short term while setting up your organization for the long term.

Ready to learn how to implement the right technology for your business? Below are the top four processes that hinder B2B growth and how you can flip the script.

  1. Operating With Manual Processes And Approvals

Because they rely on employees you trust instead of machines, manual processes can sometimes feel safer. However, they ultimately hold your business back from operating as efficiently as it could. Why? Because manual processes aren’t scalable, nor are they exact.

As long as you have one human checking off one task at a time, the process will never be able to grow with your business, and human error will inevitably creep in. On the other hand, with payments automation, multiple business processes related to accounts payable solution management can run at once — compounding as your company grows.

  1. Relying On Inefficient B2B Payment Methods Like Paper Checks

The more you rely on antiquated technology, the further behind your business will fall in operational efficiency. Yet a staggering 80% of firms were still using paper checks as of 2019, adding unnecessary friction to their supply chains and operations departments.

B2B payment methods like paper checks are not only inefficient — they also hinder the supplier and partner experience. For instance, it takes two business days for a check to clear after it’s deposited and another five business days before banks receive the funds. That processing time may delay a B2B payment from clearing by up to two weeks, which, in turn, makes it hard for your finance department to predict fund transfer timing and related data. Modern technology solutions eliminate the guesswork from B2B payment processing times, smoothing out relationships with vendors and cleaning up the data you share with your leadership team.

Old-school paperwork and paper checks also increase fraud risk. Forgers are pros by now at stealing bank checks, counterfeiters can mass produce them with a routing number, and thieves can physically alter a paper check. Perhaps that’s why 81% of organizations reported being targets of an attempted or actual payment fraud attack in 2019. Instead, choose a modern technical solution to automate your processes and leverage electronic B2B payments. It’s a safer, more efficient option.

  1. Slacking On Implementing Financial And Compliance Controls

Modern technological solutions act as safeguards against fraud loss and strengthen internal processes by leveraging enterprise-grade financial controls. If you’re still using outdated manual processes, there are probably dangerous gaps in your accounts payable solution and financial controls. You may also be susceptible to the currency risks of the foreign exchange market, which is infamously volatile. Along with these threats, manual B2B payment processes are a surefire way to overwhelm your finance team, leading to disengagement, mistakes, and other problems.

  1. Failing To Optimize For A Multi-Entity Structure

If your business is global, it’s vital that you future-proof your accounts payable operations by providing end-to-end capabilities for multi-entity companies in a single platform. This creates a solid framework for helping your finance department manage growth and scale compliantly.

Why is this important? The more your business grows and scales, the more complex it will become as you add subsidiaries, divisions, business units, and brands. If you don’t have scalable processes, there will be no way for you to ensure consistency and standardization across those entities, which will lead to an operational mess of processes and procedures. That means your different entities will have different accounting processes and workflows, making it impossible to standardize the way you do business.

It's Time To Build Your Financial Tech Stack

As they say, admitting you have a problem is the first step. Once you realize the need to separate your business from its old ways of processing payments, you’re already on your way to creating an optimized tech stack. Start by leaning into digital transformation and empowering your finance team with real-time data, which also helps you become more proactive as a leader. Once you add an automated accounts payable solution to your tech stack, you’ll have the data you need to proactively make business decisions related to your firm’s growth goals.

Finally, remember that you’re not starting from scratch. The great thing about embracing technology is that it allows you to determine the highest and best use of your human capital — and then automate the rest. Maybe you have a rock star teammate who’s bogged down in accounts payable management when they could’ve been managing a team and leaving old tasks to a computer. Start by assessing your current talent — human, machine, and otherwise — and putting together a game plan for how you can build on all those components using technology. Ultimately, technical solutions should augment your human talent, not detract from it.

About the Author

Manish Vrishaketu is the chief operations officer at Tipalti, a payments automation software that helps businesses manage their entire supplier payments operations by streamlining all phases of the AP and payment management workflow in one holistic cloud platform. Manish’s 18 years of payments and fintech experience include leadership positions at GoSwiff, Fiserv, and CashEdge.