In a recent four-part series of interviews for Shared Services Link, Traxpay CEO John Bruggeman discusses in depth the details of Traxpay’s Dynamic Payments Platform. The series has proven to be very popular amongst the online community for leaders in finance shared services, and so we thought that we would bring the key points that were made to you all here.
The interviews cover the Traxpay mission to enhance business relationships and enable further visibility and liquidity throughout B2B networks, as well as the value that is added through the uses of B2B dynamic payments for buyers and suppliers.
In our last blog, “The Truth, The Whole Truth, And Nothing But The Truth Is Required For B2B Commerce”, we took a close look at the invoicing and procurement networks specifically in terms of the procurement of indirect goods for the enterprise in light of parts 1 and 3 of the interviews. We discovered that CFOs are dealing with two separate truths when trying to gain visibility and control of their purchases and cash flow – that is, the procurement truth, and the banking truth – and that this causes a disconnect and impedes upon predictability of the enterprise’s financial picture. The solution, we found, lies in the ability to bring these two truths together, and the Traxpay Dynamic Payments Platform gives rise to this ability.
In this post, we are going to be taking a look at the world of B2B E-Commerce, and how again the Traxpay Dynamic Payments Platform is offering the data-rich solutions to the current problems that have arisen since the evolution of this market.
What’s New In The World Of Payments?
Part 2 of the interview opens with John delivering his views on what the biggest changes are that we are currently seeing in the realm of B2B payments.
The most significant disruption, as John sees it, has come about with what is starting to become a broad adoption of B2B ecommerce. The B2C segment has, of course, had a fifteen-year track record of success in E-Commerce. If we think about the likes of Amazon and eBay for instance, then it’s fair to say that most of the consumer world has been quite happy to get on the back of E-Commerce, and at this point in time we know it, we trust it, and we use it.
However, in the B2B world, E-Commerce of this nature is a relatively new concept that is beginning to emerge. The features that have been working so well for the B2C E-Commerce market – that is, the usability of online stores, shopping baskets, search, account holder histories, customer reviews, shipping prices, etc. – are now finding their way onto B2B E-Commerce sites. And in actual fact, this evolutionary mimicking has been inevitable. B2C E-Commerce sites are as familiar as they are popular, and B2B buyers will be regular everyday consumers and users of these sites too, and so the expectation for a B2B E-Commerce site to handle in a similar way has been mounting for awhile, and now the market is beginning to meet the demand.
But with it has come a whole set of new problems for the enterprise that simply weren’t there five years ago. When B2B E-Commerce is used by employees for the procurement of indirect goods for the enterprise, what happens is that those employees are presented with a choice of vendors from all over the world, many of which the enterprise has never done business with before. And so, when it comes to the payment of, say, a foreign vendor (or, more likely, multiple foreign – or unfamiliar – vendors), CFOs are presented with a complex challenge the likes of which they haven’t had to try and tackle before in a systematic way.
In the past, the enterprise has traditionally done business with a core selection of reliable suppliers it has built up a working relationship with over a number of years. But, as the B2B world has adopted B2C-style E-Commerce, the amount of businesses the enterprise deals with on a daily basis has simply exploded and reaches now unprecedented amounts. And managing the payments of all of these disparate suppliers who may reside outside of the business network is proving to be an extremely challenging undertaking indeed, especially in terms of reconciliation.
With so many employees making all manner of purchases from a whole new array of vendors, visibility is at an absolute minimum. John cites research in the interview that finds that 78% of CFOs can neither articulate nor predict cash flow with certainty because of a total lack of transparency into supplier payments. Meanwhile, the costs of processing each payment is increasing.
60% of invoices still require manual handling of some kind – and manual handling inevitably equates to errors, delays, and cost. This is a problem that has been identified, but is not yet solved. A manually-handled payment on average costs up to $300 to reconcile – and this is happening 6 out of 10 times, and hits the bottom line of the organization. This is simply unacceptable and cannot continue.
In Part 4 of the interview, John talks about the Traxpay mission to bring solutions to these problems at both the enterprise and B2B network level. The widespread adoption of E-Procurement and E-Invoicing will be required in order to bring significant costs down in the reconciliation of payments.
Traditionally, banks have been the providers of such “solutions”. But, as was discussed in depth in Part 1 of the interview, when dealing with banks, there is a disconnect when it comes to the payment truth and the transaction truth in terms of data visibility. Put simply, being only in possession of the payment truth, banks are not equipped to shed the necessary light on the valuable transaction data, which will be needed to bring costs down, enable opportunity for collaboration (dynamic discounting, supply chain financing, factoring, etc.), and automate the payments process.
In response, competitive financial products and solutions are being brought to market by business network providers that can fill the data holes that banks leave empty.
One of these solutions is Traxpay’s award-winning Dynamic Payments Platform, in which a dynamic payment has every bit of data – order data, invoice data, payment data, everything – contained within it. And with dynamic payments, buyers and suppliers can start to make use of more strategic financial tolls such as supply chain financing. Indeed, dynamic payments hold the key to a more productive, automated supply chain. John notes that in the business world the competition no longer resides on a basic company vs. company level, but rather a supply chain vs. supply chain level. Rather that “business to business”, it must become “business for business” – and companies that are able to establish the most transparent, collaborative, and efficient supply chain will be the ones with the competitive edge, and the network providers who offer dynamic payments such as Traxpay will ultimately be the ones who offer more value to their customers.
Listen To All Four Interviews: