The first entry of this three-part blog series discussed the urgent need to bring our B2B transaction systems into the modern age, to make them dynamic. But what exactly does that mean, and what does it require? That is the subject of this post.
To put it as simply as possible: Businesses want to transact instantly and fluidly, with transparency and predictability—but traditional methods of B2B payments are static, sluggish, and disconnected.
Let’s take a closer look at that term “static.” Static is the antithesis of dynamic. Static means fixed, stationary, motionless, and inflexible. And when you look at modern payment methods, that’s exactly what they are. They require all variables to be fixed throughout the transaction lifecycle.
Think of any example that comes to mind: Checks, ACH, EFT, wire transfers, credit cards, pre-paid cards, or single-use accounts. The details of each transaction—the who, what, when, where, and why—cannot change without resulting in hassles, delays, penalties, chargebacks, or other expensive, irritating, and time-consuming disruptions. They’re static.
Equally important, if any variables might happen to change during the course of a transaction, static methods of payment cannot intelligently administer or keep track of the changes, and have no capacity to handle the related data or remittance that would be required for reconciliation.
Take a typical 30-day invoice cycle, for example. Let’s say a supply chain partner suddenly requested that a payment be split, combined, rerouted, canceled, executed on condition, put into escrow, partially paid, scheduled for a different date, or altered in some other way. These kinds of changes happen to 25-30% of all global B2B transactions today. But static payment methods can’t accommodate them.
And since static payments also don’t handle rich data—such as detailed transaction text, updates, files, or photos—and are disconnected from the rest of the transaction flow, they are unable to provide transparency or adapt or keep the associated data and systems up-to-date and in sync.
That means every time variables in a transaction change it wreaks havoc on the whole payment process.
And the result is that 60% of all B2B transactions are still handled manually. Every part of the process takes an obscene amount of time—from managing invoices, to matching documents, to handling exceptions, to amending contracts. And that’s expensive—not just in monetary terms but also in opportunity costs. Static payments do not enable trading partners to control their working capital or offer or take advantage of strategic offerings such as dynamic discounting, factoring, and so on. More about that in a later post.
How many aspects of your business are completely fixed and static? If it’s a growing, evolving, customer-focused enterprise, the answer is very few. Business is dynamic. B2B payments should be too.
That is why Traxpay has introduced its B2B Dynamic Payments platform, a solution designed specifically for the needs of modern B2B commerce. The Dynamic Payments platform moves real money in real time, and delivers the rich data businesses need to get transparency and control over their transactions. And because it is integrated directly into existing ERP, purchasing, and invoicing systems, it enables a complete end-to-end solution for B2B transactions, and a new strategic weapon for commerce networks and digital marketplaces. Read more about it on our website, or download the product brief here.
The final entry in this blog series addresses a question many people ask: Why aren’t banks leading the charge toward dynamic B2B transaction systems? It would seem to be in their interest. It would seem to an excellent way to serve customers and get out in front of a huge market opportunity. But it would seem… that they’re not engaged. Learn why in our next post.