The Future of B2B Payments: 9 Trends To Help You Stay Competitive in 2023
Elizabeth Allen Written: March 15th, 2022 Updated: March 17th, 2023
As a momentum leader in G2’s Winter 2023 leaderboard, MHC strives to not only keep on top of trends in the AP world, but to actively use that information to create forward momentum that will positively impact our customers and the industry overall. With that, we are committed to encouraging thought leadership, inviting some of the most respected experts in the payables field monthly to speak on their favorite accounts payables topics.
Having hosted some of the brightest minds in accounts payable, we have been able to get a grasp on the most informative trends we’re continuing to see in US corporate payments in 2023. And as we’re always looking to the future, we’re eager to discuss the payment trends we believe will have the biggest impact on AP teams in the next twelve months. Lastly, learn how AP managers and CFOs can use this information to ensure agility in the coming years.
TABLE OF CONTENT
Top Corporate Payment Trends Shaping 2023
- Moving away from check payments
- More negotiated discounts
- Leveraging metrics and KPIs
- Mobile access to make payments
- Avoiding duplicate payments
- Embracing B2B payment option flexibility
- Prioritizing B2B payment security
- Payment process automation is becoming a necessity
- Digitizing AP and AR processes is key to staying competitive
While it’s become more important in this digital landscape, automation has become the name of the game when it comes to US corporate payments. All of the US corporate payment trends our thought leaders have identified in 2023 can be accomplished through the use of an automation solution- leveraging data capture, configurable approval workflows, and automatic payments. Ensure that your company is meeting the world where it is while preparing your company for the unexpected, allowing automation to empower your agility.
Gina Armada, CEO of MHC and winner of Aragon’s 2021 Women in Tech award, has spent her career analyzing what’s to come in the accounts payable space. And as we look ahead to a time of economic hardship, it is even more important to pay attention to those who have always been paying attention.
CEO of MHC Automation
“ Simply put, automation is the key to an agile and scalable AP operation. As technology advances, finance leadership will further understand the importance of investing in a solution that allows their AP team to go from transactional to strategic.“
How AP Leaders Can Get Prepared
- Explore payment methods outside of manual checks or ACH payments. Consider the use of employee payment cards or virtual credit cards for your AP team.
- Negotiate now with your vendors for improved early pay discounts or rebates.
- Create benchmarks and analyze incoming data to ensure that you catch problems before they become a problem.
- Ensure your payment policies are standardized, centralized, and that your entire organization is committed to following them.
- Train staff on fraud detection and implement organization-wide policies to avoid fraud altogether.
- Implement AP automation solutions to ease the flow of receipt to invoice, allowing your team increased flexibility and productivity. For companies already using an AP automation solution, tighten up your workflows and approval processes so they can accommodate the unforeseen.
The knowledge of a trend is only worthwhile if you use that knowledge to inform further action. Use 2022 as an education, internalizing what we learned about US B2B payments. Succeed in 2023 by taking advantage of automation and payment technology. And use all you learn in 2023 to build a strategy for how to win in 2024.
Top B2B Payment Trends Shaping 2023
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. The past couple of years have seen a rapid shift to digital payments and remote processes, once unthinkable in a world that still often relied solely on ACH and check payments.
Within the current B2B landscape, companies that are still depending on traditional banking methods will face many obstacles, 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 lasting 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 financial success with an eye to the future.
1. Moving away from check payments
When speaking to Recharged Education’s Lynn Larson in September 2022, she shared some of her 20 years of business-to-business payments experience, specifically on the topic of where US corporate payment methods are headed as we move towards a more digital landscape. While checks seem outdated in our personal lives, the number of checks corporations still use to pay suppliers is astounding.
Estimating approximately 12,000 checks written annually (and including the costs associated with the physical check, printing, postage, and labor), the costs to continue this antiquated payment method can cost an organization almost $10,000 per year- on top of the payments being made to suppliers. And this number is rising as the total cost of a traditional check payment has gone up to $26 per payment. According to Lynn, US organizations are getting wise and have started to move away from check payments and into electronic methods that reduce time, labor, and required resources. AFP’s 2020 Payment Survey estimated that nearly 60% of businesses are reporting transitioning payment methods from checks to more convenient electronic options.
While ACH (automated clearing house network) payments remain a preferred method once an organization graduates past writing manual checks, there is a high cost demanded of both the payer and payee and it leaves the business open to be a target of fraud. Physical credit cards can be provided to employees responsible for making purchases and results in convenience, reduction of invoice and expense reimbursement requests, and can provide potential rebate opportunity to the organization as a whole.
Yet, US companies must keep in mind that not all suppliers are eager to receive payment via credit card, due to the associated processing costs. And one thing that must be considered is that if you are to provide credit cards to employees, a corporation will have to install a staff member or team to manage the program. Virtual cards are also another option, allowing the payment to be made by the AP team. The COVID-19 pandemic has also intensified the need to move beyond paper checks. Business quickly adapted and became used to digital payment options. And as changes in the economy and labor market accelerate, businesses will need to learn into faster, less expensive payment options.
WATCH WEBINAR RECODING
Speaker: Lynn Larson
Watch our webinar to see B2B payments veteran Lynn Larson identify what can trip up an organization in its quest for upped efficiencies and cost savings.
Principal of Recharged Education
2. More negotiated discounts
Inflation is a topic we just can’t seem to escape. We see the proof of inflation at the grocery store, in our retirement portfolios, and even at the gas pump. Regardless of industry, inflation has hit the entire globe and only appears to be getting worse. And unsurprisingly, this will increasingly impact organization-to-supplier payments.
Brian Rosenberg of The Rosenberg Group joined us in September 2022 to discuss how to move toward an advanced way of thinking about your accounts payable process. And part of that requires re-evaluating how we leverage early-payment discounts. Along with a change in consumer demand across industries, many businesses have begun 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.
As inflation continues (or, unfortunately, intensifies) and borrowing becomes more expensive, US suppliers will start to feel more pressure than ever to offer discounts. Pressure from their own accounts receivables teams will entice them to collect money faster, improving supplier relationships, and offering more in-the-minute data about an organization’s cash flow. This will become nearly impossible with traditional check issuing and processing. A conversion to digital payment processes will be a vital party of taking advantage of the early or real-time payment incentives that will benefit your company greatly.
And AP teams can take advantage of this upcoming trend in US corporate payments. Negotiating payment discounts will improve your company’s cash flow during a time when the health of that cash flow is of the utmost importance. And as this same inflation will cause vendors to be less likely to waive late payment penalties, it is in AP’s best interest to pay early, receive any offered discounts, and avoid late fees.
WATCH WEBINAR RECODING
Speaker: Brian G. Rosenberg
Sharpen that pencil, open that notebook, and watch our our webinar and graduate to the next level of AP and P2P management as we talk about techniques to address the largest challenges in AP.
3. Leveraging metrics and KPIs
In July 2022, Brian Rosenberg of The Rosenberg Group was kind enough to share his thoughts on how metrics and KPIs can be used to improve your US corporate payment process. Analyzing the differences between KPIs and metrics, Brian painted a concise picture as to how all the data available to AP teams can be optimized to meet organization-wide goals and objectives.
KPIs are made up of leading and lagging indicators. Lagging indicators are information about past performance. While useful, measurable information, this data no longer allows you the opportunity to influence future performance. On the other hand, leading indicators, while more difficult to measure, give companies a chance to use present data to achieve future goals.
When it comes to US corporate payment trends, more companies are starting to lean on leading indicators as a way to ensure more timely and accurate payments. For example, your company’s backlog is a lagging indicator that shows your AP team is having some issues with moving invoices quickly from receipt to payment. This information only tells you that there are delays. However, using data to obtain invoice processing times can indicate where the bottlenecks are in the process and allow you to use that information to reduce those delays. And with the ability to reduce payment delays, you’ll reduce backlog. And as you reduce backlog, your organization is more likely to obtain early payment discounts, rebates, and avoid late fee penalties.
WATCH WEBINAR RECODING
Speaker: Brian G. Rosenberg
Metrics matter. Join us for this in-depth examination/analysis/breakdown overview of how AP and Procure-to-Pay operations can be transformed through metrics.
4. Mobile access to make payments
A very interesting and timely topic, Mark Brousseau of Brousseau & Associates joined MHC in June 2022 to discuss The Great Resignation and how it’s impacting the US accounts payable world. While this uptick in employees voluntarily leaving their companies has resulted in one-third of AP pros working longer hours, we’re still seeing 57% of AP departments with only partially automated processes. Manual processes are frustrating and time-consuming, leaving many payables professionals to question their satisfaction with their careers. As companies try to mitigate this by being more flexible with work-life balance (offering a remote or hybrid work environment, allowing for non-traditional work hours), the functions and needs of the department will evolve.
In his research, Mark found that 35% of workers are more likely to begin a job search if they are required to work in an office full-time. This increases the call for automated process workflows along with electronic payment options and convenient mobile access. Organizations will need to stay competitive by allowing their payables team to make vendor and supplier payments, regardless of where they’re sitting, regardless of the time of day. Automation, mobile access, and electronic payment options are a US corporate payment trend we expect to see if companies want to retain a talented and experienced pool of employees.
WATCH WEBINAR RECODING
Speaker: Mark Brousseau
Watch our webinar to discover how AP automation can help you survive the Great Resignation by creating a more digital and fulfilling workplace!
President of Brousseau & Associates
5. Avoiding duplicate payments
In the best of times, companies want to avoid making duplicate supplier payments at all costs. Not only does it impact your cash flow, but it takes valuable time and resources to determine the cause of the duplication and to right the initial wrong. However, as we head into a more uncertain economic time, companies will not be able to afford to make extra payments to vendors. And as it stands, one to two percent of all payments are duplicates. While an annoyance usually, duplicate payments could seriously hamstring an organization’s ability to do business during an economic downturn.
In April 2022, Mary Schaeffer of AP Now hopped on a webinar with MHC to discuss just how detrimental duplicate payments can be to a company. She went over what a duplicate payment is, how to identify that duplicate payments have been made, how to resolve the issue when discovered, and how to avoid making duplicate payments going forward. In 2023, it is even more imperative to create a standardized, team-wide policy- ensuring all parties are following a process that will avoid payment duplication. Teams will have to begin committing to utilizing a centralized location for the receipt of invoices. AP departments will also likely have to become more assertive with their suppliers- requesting that duplicate invoices are not sent unless and until the payment deadline has been exceeded. These are just a few steps that will keep companies from making additional payments they simply can’t afford to make in times of financial crisis.
WATCH WEBINAR RECODING
Speaker: Mary Schaeffer
Vendors don’t automatically return duplicate payments, so preventing them is your best option. Find out how from AP Now’s Mary Schaeffer!
Founder of AP Now
6. 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?
7. Prioritizing B2B payment security
The COVID-19 pandemic 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.
WATCH WEBINAR RECODING
Speaker: Rocco Lueck, Professor, D’Youville University
Many organizations focus on fraud detection techniques, but few utilize fraud prevention strategies. Register for our webinar to find out how to prevent fraud!
Professor, D’Youville University
“ What is fraud? You’ve probably heard the term thrown around quite often. It is defined as intentional deception. Most often, there’s an intent behind it. And it always involves concealment. So it’s very difficult to find. While I do see that organizations spend a lot of time on detection, prevention is also a big part“
8. 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 2023 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.
WATCH WEBINAR RECODING
Speaker: Mark Brousseau, President of Brousseau & Associates
Economic storm clouds are gathering. Join us for this free webinar as our speaker shows you how AP can help a business thrive and succeed, no matter the economy. Register today to learn how to predict and prepare for bad economic weather.
President, Brousseau & Associates
9. 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 missing out on these critical benefits for your company.
How AP Automation Software Takes Your Business
into the Future
Digital transformation is the act of combining your current business processes with automation-based technology, and it’s impacting all industries. Digital transformation has resulted in increases in employee productivity, organizational security, data visibility, and overall builds a dynamic company that is ready and eager to innovate. If your future includes growth, we are ready: MHC NorthStar is scalable, and expands with your business.
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.
If your future includes the plans for growth, we are ready: MHC NorthStar is a stellar automation solution for accounts payable and your ultimate financial digital transformation. Focusing on scalability and agility, our solution boasts features such as intelligent invoice capture and automated invoice processing. Streamline multiple integrated processes that your AP department relies on and be ready for what comes next. Ready to prepare for the future? Request a demo today to learn more.