Slow and steady does sometimes wins the race. As the children’s story goes, because he went too fast and tired himself out, the hare lost to the unbelievably slow tortoise in their fabled race. Plainly put though, slow and steady does not make a business more competitive or run better—it’s quite the opposite. As processes are delayed, shipments are postponed, and payments are unbelievably slow, businesses most certainly lose the race.
That is the building block of inefficiency that the payments systems of the B2B world today are built on. Procurement officers are dealt shoddy information from their company’s processes; suppliers would prefer to wait for guaranteed payment before shipping goods, and today’s traditional static payment methods can be delayed up to seven days or more before the seller gains access to the funds that the buyer has already sent. Real-time decisions or transactions cannot be made without access to real-time information, and much like the tortoise of the fable, slow and plodding cannot be the way of the future.
Overrun by slowness, the payments process is made worse by the lack of visibility offered from within the payment system itself. Paying money owed is one thing; it is an entirely different thing for the supplier to receive funds with urgency, finality, and the right data. Knowing that payment has been made in the right amount and in the right currency is critical. Being paid less in the ever fascinating, Bitcoin-replica Dogecoin never makes for a happy CFO. The very lifeblood of a business is cash flow. Receiving money ensures enough cash flow to keep the business running. Problems arise for companies of any size when the money flows unpredictably, meaning it arrives at the wrong time, in the wrong amount, in the wrong currency, or without proper remittance information. The current traditional static payment methods do nothing to ease visibility for those who have to manage cash flows because payments are delayed and largely a black box while they are being cleared and settled—and since very little data can be sent with a traditional payment to describe the transaction, the paper trail is often quite difficult to locate.
It is a well-known fact that “knowledge is power” and since visibility in payments is pretty much non-existent, companies are left powerless in this case. This is particularly troublesome when buyers use lack of transparency in payments to improve DPO rates and hold cash until after it is due. It happens. Without proper visibility into payments, suppliers do not have the appropriate insight to manage their business properly, and may have to delay operations or seek alternative financing (expensive!) to make sure they can keep things running in the meantime. If it were just a few payments here and there, it would not be a big deal. However, it’s a much bigger problem than that. According to a 2013 study by the The Hackett Group, more than 30 percent of all invoices are paid far after their due date, 59 percent of CFOs cite poor visibility into payments as a major issue, and 78 percent of companies are unable to forecast cash-flow accurately. With statistics like these, it is clear why companies feel powerless when it comes to payments.
Today, traditional financial flows and corporate transaction data flows are entirely separate. This means the money goes one way, and the data that explains the payment goes a different way. Never connecting. What’s more, if there is ever a change to the terms of a payment—such as the who, what, when, where, why, or how the payment should be handled—the financial and data systems are oblivious to the change, creating a massive interrupt in the system. Not a lot of companies right now run their system in a way that allows notes and details on the transaction, so many of them are going through the system blind. There has been no way to connect the financial and data flows. The market today offers, for the most part, the use of static payments, the tried and true slow tortoise, and that is it.
Recognizing this situation, Traxpay set out to transform the way that companies pay and get paid with its breakthrough in electronic payments called B2B dynamic payments. Because Traxpay B2B dynamic payments operate in real-time and are cloud-based, all funds and all data related to the transaction is instantly accessible for both parties in the transaction at any point. Traxpay is a one-stop shop when it comes to faster, safer, smarter B2B payments that gives companies the knowledge and power they need to make better decisions related to their cash position. Not only do B2B dynamic payments ensure companies can beat the turtle in the race, but that it can easily lap it as well.