Moderna plataforma de serviços bancários da FIS
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September 21, 2017
Dan Peacock, Vice President of Product Strategy
The financial crisis a decade ago brought into sharp focus the need for companies to pay particular attention to their cash and working capital management. However, the world of business-to-business (B2B) payments remains slow to embrace the digital revolution. Electronic invoicing, billing and payment reconciliation still are haphazard between businesses, large corporations, and small enterprises, while checks continue to cause delays, and add costs and supply chain issues for all parties. Banks and their business and corporate customers must set a path for the future of business payments.
E-invoicing can help organizations improve supply-chain financing by automating the Accounts Payable processes of receiving and processing incoming supplier invoices. And with B2B invoices nearly double the dollar volume of the business-to-consumer market, adoption of electronic forms of payment is long overdue.
Stop Checking the Payment
For well over a decade, B2B payment analysts have predicted the demise of paper checks. Yet each year, new evidence emerges that paper checks continue to dominate the supplier payment space. After all, business owners have done it this way since their launch, why change now? Paper checks, however, are highly inefficient, especially when delivered by mail and when they require a business to time cashing of those checks against funds arriving. Meanwhile, the cost to process checks on the receiver’s end has reached an average high of $6, and can run as high as $25.
The rise of ACH payments suggests corporate treasurers are likely to trend away from accepting paper checks, supporting an ongoing shift toward electronic B2B payments. Unfortunately, the more efficient, faster card payments mechanism still accounts for a single-figure percentage of the B2P payment market. ACH-based payments are only one factor of the solution. Firms remain on-the-hook, scrambling to find new ways to get paid, when settlements don’t go through due to payors not having enough cash on hand to cover a payment. To reconcile payments, collections departments are still a major operation with considerable overhead and little to no automation.
Consider the frontline of B2B payments: the deliveryman drops off supplies to a business customer. Historically, a vital part of the job is to collect or bill a payment after the drop-off. Typically, the deliveryman will need to pick up a check or leave an invoice for payment (generating an ACH, wire or check in the post), hoping the invoice can be reconciled to the payment later in the process. It’s time to reduce the friction and delays in these payments.
Digitize to Automate
Electronic invoicing and billing are key components to improving B2B payments and processes. Also, widespread e-invoicing is a central component to promoting a real-time economy. But one of the biggest challenges today is that migrating to a fully automated and digital process for electronic B2B payments – including AR, AP, reconciliation, accounting and other aspects of corporate finance – remains fragmented. Consolidating the entire process chain is vital to make significant strides in the process.
Enterprises of all sizes and sectors should move toward mechanisms that make paying all suppliers electronically possible. Businesses want to collect electronically from other businesses. The underlying payment mechanism will inevitably vary – ACH or wire, credit, debit or prepaid cards, all forms need to be accepted – but the matching and reconciling of e-invoicing and e-billing solves the biggest pain points. To that end, organizations that win in e-invoicing should have solutions which provide for additional information to be added to bills, to automate and streamline the reconciliation and speed up the payment process. Issuing e-invoices to clients help businesses fully digitize accounts receivable processes and automates payment acceptance.
In a digitized environment, accounts receivable and accounts payable can be combined. This promotes a seamlessly connections between payment processing and accounts payable systems, including remittances, tracking payments and reporting. Payments should be processed quickly, correctly and securely. At the same time, suppliers want to know when they received their invoice and its status.
With a more automated end-to-end process, invoice issuers immediately receive either rejects (in the case of inaccurate invoice data) or confirmation (if the e-invoice successfully passed the automation validation). Furthermore, digital invoices enable real-time visibility into the financial data and support better enterprise-wide operations.
Promoting the use of digital payments can also significantly improve security, speed, and efficiency when compared to paper checks. That’s important because many companies regularly experience both actual and attempted check fraud. The best way to combat this relentless crime wave is to move to electronic payments.
Process efficiency and security also are valuable benefits to migrating to a more digitized invoicing, billing and payment system. But it is more important to consider the time and cost savings of automated electronic bills. With e-invoicing, e-billing and electronic payment mechanisms, lost invoices and late payments can be reduced dramatically. The collections department, once a bastion of manual processing and intervention, can become a hub of automation and straight-through processing, where only rare exceptions need attention. Even the inevitable reminders to customers who are late on due payments can be automated.
The speedy and automated management of accounts receivable ensures that cash flow is optimized. Where businesses once were forced to wait for days to process a check- or ACH-based payment, modern B2B payments promise to perform the same task electronically, within a matter of hours.
New electronic invoicing models automate both sides of the process, simplifying the end-to-end invoicing processes for customers and trading partners alike. Technologies such as e-invoicing and e-billing provide the platform to remove paper from the model, and cost savings will directly impact the bottom-line.
Slow Train Running
B2B has been slow to embrace digitizing its value chain, but its future points to increased speeds, lower costs and greater uptake in every sector. The rise of mobile payments will help change the way B2B works as multiple payment methods are controlled at a single point of contact on a single device. Businesses, especially smaller businesses, can run finances like a household might, picking and choosing which accounts to use for payments, while factoring in when and where.
Looking ahead, e-invoices could become a potential tool to promote the adoption of blockchain solutions. Ledgers can now be used to transmit digital documents (i.e., invoices) through an efficient infrastructure, resulting in reduced costs for all market participants.
We can be confident that adopting e-invoicing and electronic payment methods will accelerate.There are plenty of reasons to remain hopeful that businesses might not depend on manual processes and paper checks much longer in the years to come.
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