• B2B Payments Today – Part 2: Binning Paper Isn’t Enough  

B2B Payments Today – Part 2: Binning Paper Isn’t Enough

In the first part of our blog series on the current state of B2B payments, we focused in on the persistence of paper and manual processes in Accounts Payable (AP), and shared grave warnings from a recent Ardent Partners report for businesses who continue to shy away from embracing payment automation.

The report, which surveyed 200 leaders from AP and finance, states that 37% of B2B payments today are still made by paper check. One especially interesting aspect of that statistic is the finer details around the 63% of businesses that do use some form of ePayment technology.

Of those AP teams tapping into available ePayment solutions, only 49% say they are equipped to submit detailed remittance information along with electronic payments. That’s a problem because, as the report points out, “Remittance information answers a series of key questions, including who the payment is from, what they are paying for, understanding if the correct amount was paid etc. Without clear remittance information, reconciling payments can take much longer on the supplier side and creates more opportunities for mistakes.”

AP Remittance Capabilities

In fact, limitations on rich remittance data – such as the 140-character limit imposed by the SEPA standard in Europe – has been a key factor in suppliers resisting the move to ePayments for many years. At least paper checks come with more information than you can fit in a single Tweet, right?

To be fair, Ardent Partners’ report is quick to point out that this historic absence of rich data is now being addressed by newer ePayment solutions. But the statistics certainly suggest that not all ePayment technologies are created equal – and that many businesses currently making payments electronically are missing out on significant additional advantages.

Among the “myriad” ePayments options available for businesses, the report is full of praise for Payment Networks, which it defines as “a subset of business networks that specialize in automating and facilitating the invoice and payment process between trading partners.” 29% of businesses plan to increase their use of such solutions, an adoption rate Ardent Partners says is down to Payment Networks’ ease of use, allowance for remittance data, scalability, and a collaborative focus that improves partner relationships.

The specific advantages or disadvantages of different types of ePayment solutions take on further relevance in light of another set of statistics from Ardent Partners’ report. When asked about the changes they expected to see in AP by 2017, respondents were in total agreement about the likely decline of paper in the office, a move away from manual tasks, and increased automation. Those predictions seem fairly safe in light of the general rise in ePayments as a whole. More interestingly, though, around half of those surveyed believed AP staff would have a growing part to play in shaping overall company strategy – no longer pigeonholed as a department with little more than the skills to pay the bills. These expectations come down to one simple factor: data.

Expected Changes in AP

As the report puts it, “Increasing AP’s involvement in cash management, which 48% expect by 2017, will come about from improved visibility into upcoming supplier payments … And, with the data that AP can provide on supplier payments, Treasury can craft more robust cash forecasts and perform more detailed financial planning and budgeting than it could without this data.”

As the survey shows, such functions are expected by many to become commonplace in AP, but will only be unlocked by employing best-in-class technology solutions that go beyond the basics of ePayments and fully integrate the precious data connected to those payments. In Ardent Partners’ words, “A rock-solid technology program is a key to success in the ePayment realm.”

If the steady demise of paper-based processes in AP is now something of a given, it appears the next major issue for businesses to address will be not just whether they embrace ePayments, but whether they also go the extra mile to maximize automation, capture precious data, and unlock the true potential of today’s available payment platforms.

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