• Extending the “Collaboration Economy” to B2B  

Extending the “Collaboration Economy” to B2B

We’ve all read about the advent of the “Collaboration Economy,” a new economic model of inclusion where a free-flow of ideas and information accelerates growth on multiple fronts.

We’ve even seen the first examples of this new paradigm with companies such as Uber and Airbnb—companies that created new business models based on new forms of collaboration. It brings buyers and suppliers together in a 21st century way, it offers rich contextual data that details the interaction, and adds the ever-critical financial settlement piece as well for a completely seamless end-to-end user experience. And it’s a fantastic development. For consumers.

Here’s the question: Why doesn’t the Collaboration Economy extend to B2B? Why is it only a consumer paradigm?

Because there have been no players that have been able to connect the worlds of B2B trade, banking, and enterprise data to make it happen in a seamless way. Today, these three pillars remain separate entities built on separate silos of technology, and they can’t communicate, share, interoperate, exchange, correlate, or perform any other type of collaborative activity. Each is an island unto itself.

The consequences of this disconnect are large and growing. For example, recent research shows that:

  • More than 60% of B2B payments are still handled manually, causing up to 25% payment mismatches.
  • 78% of companies cannot forecast short-term cash flow accurately.
  • Over 30% of B2B invoices are paid after the due date or not at all. [1]
  • Current B2B transaction systems cannot evolve quickly to reflect changing business conditions.
  • The average DSO figure is currently 50 days
  • Cross-border payments are expensive and can take weeks to process
  • Supply chain finance (SCF) or factoring is currently too expensive for many businesses—especially small to medium-sized businesses.

The worst part is that the technology to bridge these islands already exists. So why hasn’t it been implemented?

Because the major players in finance and technology—the companies you’d expect to address this issue—are simply not capable of driving the type of innovation that is needed to institute a change. It is not so much a technology issue as it is one of culture and subject matter expertise.

The simple fact is, traditional banks have never been innovators when it comes to technology-based solutions. In fact, there has been virtually zero bank-led innovation in the B2B payments space for years. Some would even argue hundreds of years. Banks aren’t revolutionizing B2B transaction capabilities because 1) They have “supplier power” and don’t have to, 2) The current – very profitable – model works just fine from their perspective, and 3) The technical issues have become too complex for them to handle with their legacy systems. To lead the charge, they would have to overhaul their infrastructure, make radical changes to long-standing operational procedures, reorganize, and magically pull a culture of innovation out of a hat.

On the other side of the coin, tech behemoths such as IBM, HP, Oracle, Cisco, etc. have been sluggish in taking on this challenge, partly because banking is outside their core competency and partly because they tend to focus on “fixing” the old way—making incremental improvements—rather than proposing an innovative new solution.

That’s why a new market entrant, not an old-school market leader, will be the one to revolutionize B2B commerce. A non-bank entity that can combine a fresh perspective and leading-edge technology purpose-built to take B2B commerce to a whole new level.

In other words, it will take a company just like Traxpay. Traxpay is the company that can integrate the pillars of B2B commerce, bridge the islands, make the connections.

Traxpay is in the prime position to lead the B2B commerce revolution. Traxpay’s Dynamic Payments redefines the way businesses pay and get paid in today’s connected economy. The patent pending platform uniquely combines secure, flexible, real-time 24/7/365 electronic payments with any and all structured and unstructured data related to the transaction.

In addition, Traxpay brings an “always on” channel of communication and transparency across the supply chain, opening up the ability for real-time collaboration. What further sets Traxpay apart from all others is its unique and configurable workflow engine that automatically monitors and dynamically implements changes to the who, what, when, where, why, and how of payments, while keeping all the data, business conditions, and transactions synchronized.

Our recent round of funding and our new, major partnerships reinforce the fact that Traxpay—not a big bank, not a big data player, not a B2B trading platform —has the right open and flexible technology platform to converge all these areas and by doing so usher in the new era of B2B commerce. Stay tuned and see what’s developing at Traxpay. Because change is coming—and we’re leading the charge.

[1] Source: The Hackett Group (as reported in the Purchase to Pay Manifesto from Basware).

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