Why build a separate, bank-centric payments infrastructure—when you could just use your existing network?
Chances are, your company already has a network in place for B2B transactions such as purchase orders, sales orders, product co-engineering specs, inventory tracking and tracing, sales and procurement forecasts.
Whether your B2B network is home-grown or outsourced (e.g. Ariba Network, GXS, Tieto, Elemica, E2open, Tradecard, Covisint, Coupa), it’s probably quite effective at connecting your company with logistics providers, suppliers, and distributors in extended networks of trading partners.
Why, then, isn’t your company using that same network for B2B payment transactions?
It’s a simple fact that payments, purchasing, inventory management, and logistics management are all closely related and tightly interconnected. So when such exchanges are made possible through B2B platforms, why are payments treated differently from other transactions? Why aren’t bank accounts simply “buckets” where payment transactions flow in and out according to instructions provided by buyers and sellers?
It’s also a simple fact that communications between buyers and sellers carry relevant data for settlement, reconciliation, and order matching, since the infrastructure they run on is the same used to send invoices and sales orders and to receive purchase orders.
That is why a new model for B2B transaction networks is not just appealing but long overdue.
Consider a scenario where we have three companies: Company A, Company B, and Company C, all connected onto that same B2B platform they’re already using, but now with the ability to make real-time payments, with instant execution 24/7. Through the platform Company A sends purchase orders to Company B and buys goods; Company B buys from Company C using the same platform; and Company C purchases goods from Company A. Each receives from, and makes payments to, one of the other platform partners.
If we extend this simple scenario to the multitudes of companies networked on B2B platforms, it becomes evident that a mechanism that clears payments transactions within the platform itself is not such a crazy idea. It simplifies transactions, cuts costs and delays, reduces errors, and accelerates business—all without requiring a disruptive and expensive IT project.
And moving one step further into the future, these networks of interconnected trading partners could become clearing hubs for inter-company payments. In B2B networks, companies are buyers and suppliers at the same time.
Forward-looking and entrepreneurial platform providers could even offer “virtual” bank accounts for clients, totally dis-intermediating banks.
I would not be surprised if in the not-too-distant future we will facilitate partnerships between B2B platform providers and vendors of payments and clearing systems. Payments (and clearing processes) need flexible, secure, and reliable applications.
The bottom line: it is expensive, inefficient, and unnecessary to create new bank-centric infrastructures to enable payments between companies—when they are already connected via B2B platforms. What is needed is a payments capability that can fit into the existing B2B network infrastructure and the back-end systems of corporations—a platform that can aggregate and transmit rich data across the value chain while offering secure real-time, 24/7 payments.
Simply plug Traxpay into what already works. It is what we were built from and what we do best.