An interesting duality of the COVID-19 pandemic can be found in the rapid development of both traditional activities and new processes. The latter can be seen in the world of B2B payment trends. 2020 and 2021 saw a rapid shift to digital payments and remote processes, once unthinkable in a world that still often relied on ACH and check payments.
Within the current B2B landscape, companies that are still depending on traditional banking methods will face many pain points, including payment delays, limited payment visibility, high labor-based processing costs, fraud risk, and a lack of information transparency. Any one of these issues can have a negative impact on your organization, customers, and suppliers.
In this article, we will share the emerging trends shaping the B2B payment industry, and how you can prepare your business for future financial success.
TABLE OF CONTENTS
Six Future B2B Payment Trends You Need To Know
- The decline of checks
- Embracing B2B payment option flexibility
- Early-payment discounts will become more popular
- Payment process automation is becoming a necessity
- Prioritizing B2B payment security
- Digitizing AP and AR processes is key to staying competitive
Six Future B2B Payment Trends You Need To Know
Traditional B2B financial operations often cause problems in an on-site office setting, and these obstacles are only compounded in a remote work setting. The upcoming shifts in the B2B payments field offers numerous solutionsto these issues. Your organization has probably seen significant process and technology innovations during the pandemic.
Here are six of the most important trends that your organization should know.
1. The decline of checks
With possible origins dating back to ancient Roman banking practices, checks were the preferred format for B2B payments for hundreds of years, but are now facing a sharp decline due to the pandemic-induced need for digital-friendly options. According to the AFP’s 2020 Payments Survey, nearly 60% of businesses are reporting payments transitioning from checks to more convenient electronic options.
In addition to the need for more flexible payment methods, the cost of processing traditional checks is increasing. Currently, it can cost up to $26, including postage, to issue a traditional check payment.
The COVID-19 pandemic also intensified the need to move beyond checks as a primary payment source. With much of the workforce working remotely, companies no longer had the ability to physically write and distribute checks, so many businesses relied on digital payment options. In order to meet both workforce and customer needs, as well as to cut costs, businesses will need to lean into faster, less expensive digital options.
2. Embracing B2B payment option flexibility
Many consumers survived the pandemic by ordering takeout, household supplies, and more with a few simple clicks online or in an app. As a result, businesses now want the same convenience and flexibility with B2B payments and the related interactions, including contactless options, multiple payment methods, and even one-click purchasing.
It’s essential that your organization is keeping up with your competition. A 2021 Forbes study found that businesses currently offer at least four payment options, including digital wallet, real-time, wire transfer payments, and traditional credit card payments. Payment flexibility will be vital in the B2B payment industry moving forward. Are you ready to meet your customers’ expectations?
3. Early-payment discounts will become more popular
Consumer demand has influenced the B2B world with real-time payments increasing in popularity. For example, it’s a good practice to auto-direct a small portion of each paycheck into your savings account to create a financial nest egg and prepare for future investments, like a house, a vacation, or a new car. Similarly, many businesses are offering early-payment incentives, such as a 2% discount for customers who pay within 10 days instead of 30, in order to capture even more of the benefits offered by fast payment processing.
Faster payments have many benefits, including increased simplicity and efficiency, stronger relationships with suppliers and vendors, and easier access to accurate data. Real-time or any other type of rapid payments are nearly impossible with traditional check issuing and processing. A conversion to digital processes will be a critical part of rolling out early or real-time payment incentives at your organization.
4. Payment process automation is becoming a necessity
With the declining use of checks, flexibility increasing, and a focus on rapid transactions, payment process automation will also become necessary in 2022 and beyond. Before the pandemic, manually managing B2B payments was becoming more and more difficult. Now, it’s no longer the standard process.
Payment process automation uses software to combine, streamline, and automate numerous manual processes to save time, reduce errors, and help eliminate approval bottlenecks.
With more of today’s workforce moving to remote or hybrid roles, payment process automation offers a centralized, cloud-based repository for your important files. This allows users to easily access necessary information from most devices, anywhere, anytime. Payment automation is a great way to stay competitive by improving both your team’s efficiency and, subsequently, your bottom line.
5. Prioritizing B2B payment security
The COVID-19 pandemic has exposed an alarming increase in financial crime. Criminals took advantage of companies that were wholly unprepared for the sudden shift to remote work and employees who were caught up in rapidly changing business processes. They launched large amounts of both simple and sophisticated scams. One common example is submitting realistic-looking, yet fraudulent invoices that need to be paid immediately, usually on a Friday or before a holiday. Frazzled workers would then ensure the invoice got quickly paid only to find out the company doesn’t exist after submitting payment.
In order to protect your employees, organization, and vendors, you need to have secure B2B payment methods. Advanced AP automation platforms, like MHC NorthStar, offer features to secure your payments and detect fraud with capabilities such as transaction monitoring, payment reconciliation, updated firewalls, and regular risk assessments on your network to ensure your payment protection.
6. Digitizing AP and AR processes is key to staying competitive
Even though providing digital methods to make and track financial transactions became vital during the pandemic, this will eventually become a non-negotiable necessity. Businesses will need to digitize its AP and AR processes in the near future.
Fortunately, your company will reap the benefits of this modernization. Digitizing your AP and AR processes streamlines work, helps with uniting remote workers, increases collaboration and transparency, and prevents manual errors. It can also make difficult processes like collecting payments an easier task for both parties, which reduces late payments, helps to prevent fraud, and improves client and vendor relationships.
An estimated 70% of businesses planned to automate their AR processes in 2021 per the B2B Payments Innovation Readiness Report. Make sure you are not left out of realizing these critical benefits for your company.
How AP Automation Software Takes Your Business into the Future
From fraudulent phishing attacks to a check lost in the mail, it’s likely that your company has experienced a few of these issues over the last two years. MHC Northstar can help you with a digital transformation process that will resolve past problems, and prepare you for the future of B2B payments.
Digital transformation is the act of combining your current business processes with automation-based technology, and it’s impacting all industries. The results of digital transformation will include increases in employee productivity, organizational security, data visibility, and overall a dynamic company that is ready to innovate. If your future includes growth, we are ready: MHC NorthStar is scalable, and expands with your business.
MHC NorthStar is a stellar automation solution for accounts payable and your ultimate financial digital transformation. Features like intelligent invoice capture and automated invoice processing for AP departments are effective ways that you can streamline multiple integrated processes. Ready to prepare for the future? Request a demo today to learn more.