Industry News

Is there a case for using consumer tech for B-to-B payments?


John Adams | Tuesday, March 28, 2017

Payments Source

The business-to-business payments market is one of the laggards in transaction automation, and a reason often given is the lack of customization options. Businesses are using consumer-style technology for business purposes, and the fit isn't right.

But the business and consumer worlds aren't as far apart as many would think, according to Scott Noyes, the manager of purchasing and IT for C.E. Smith, a Greensboro, N.C.-based company that manufactures a range of travel and outdoor goods.

The company is using the same e-commerce software for its B-to-B operation as its consumer direct operation, and with its migration about two thirds complete has found an effect on productivity and sales. The company is privately held, but says sales this year are on pace to jump about 25% from 2016.

"Our initial goal was to tie our back end to consumer sales, but we've also focused on covering business to business clients that order on a regular basis through our website," Noyes said.

C.E. Smith's clients, which include retailers such as Bass Pro Shops, Cabela's, Academy Sports, Tractor Supply and Amazon, require electronic data interchange for B-to-B payments. C.E. Smith found that by integrating EDI with enterprise resource planning, a move that's similar to e-commerce merchants pairing mobile payments with inventory management and staff scheduling, it was able to redeploy about six of its 55 total employees away from fulfillment and reduce processing times from a few days to the same day.

"Before the integration we had no way to get into our ERP other than duplicating the manual work from the order," Noyes said. "And we still get faxes or email invoices and orders; we can put that directly into the ERP system."

C.E. Smith has also integrated its consumer-direct orders into its ERP system, enabling payments to be directly paired with inventory to manage stock that's going to larger retailers and individual buyers from the same system. A third IT project will link payments to inventory management for smaller retailers that don't use EDI, which is usually a bastion for larger big box chains.

"The orders will go right into ERP without manual data entry," Noyes said. "Also, many smaller retailers may not be aware of all of the items that we carry. This will give them access to that larger list online."

C.E. Smith is taking advantage of a broader trend in digital payments to match transaction data and execution directly with shipping information. The larger retailers are also increasingly using this technology, making it easier to order and pay C.E.Smith, which can also manage its own supply through the payments portal.

This type of linkage become a staple for technology that links retailers to consumers.

Square just rebranded its Square Register to Square Point of Sale to reflect the link between inventory tracking and sales. The strategy also extends to processing, where Heartland has used technology acquired from Leaf's point of sale system to add merchant services. Terminal makers have also gotten into the act, with companies such as Ingenico partnering with technology providers to diversify the software that's available through its point of sale system.

C.E. Smith's technology provider, Nexternal, is a subsidiary of HighJump, which also provides C.E. Smith's EDI technology through another HighJump subsidiary, TrueCommerce. These elements are designed to link consumer to C.E. Smith's own supply chain and that for shipping goods to stores. Instead of using consumer e-commerce technology as a placeholder until something designed for businesses comes along, Nexternal is tying together the entire payments system, predicting supply chain managers will also be attracted to online shopping, ordering, payments and fulfillment.

"The lines between B-to-B and B-to-C are becoming blurred," said Haitham Ghadiry, a vice president at TrueCommerce. "You have a lot of companies that supply goods to retailers, but they also have an increasing channel to sell directly to consumers. So they have to be ready to manage supply chain payments and credit card or PayPal or debit cards for consumer payments."

The linkages can be helpful and increase efficiencies and business management, but there are still challenges to adoption, since the long-stated slowness of businesses to adopt digital payments for supply chains is partly by design, according to Andy Schmidt, an executive advisor at CEB.

"These are businesses that can collect fast and pay slow," Schmidt said, adding often suppliers look to benefit from the float of that delay. "They're looking to hold onto cash for a little bit longer."

This article was licensed through Dow Jones Direct.

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