How Businesses are Redesigning Their Payment Structure in the Age of Disruption

Over the course of the past few years, the B2B payments space has experienced unprecedented expansion. According to the leading business consultants, the global B2B payment will be grossing about $23.1 trillion by 2020 (Source: https://bit.ly/2Xuc5lV). From legacy technologies and process that have already passed their prime, critical A/R transaction across the B2B environment have now become digital.

With customers payment preference changing rapidly over the time, business across the world are now embracing digital systems to synchronize with the consumer behaviour. Providing more flexibility over time and outlays, adoption of digital payment methods is quite the need of hour.

What Drives the Shift?

Various studies on account payable lifecycle of the B2B premises reveal that the traditional transaction is challenged by an array of unmet needs. The rapid shift towards the integration of digital payment is highly triggered by the following factors.

  • Delayed payments: On an average, the processing of business checks, takes around 10 to 15 days, which results in vendors and suppliers getting delayed payments for the products and services. 
  • Limited Payment Visibility: With tedious methods of processing multiple checks at a time , an end-to-end view of all the transactions is hindered. As a result, businesses are quite likely to incur extra costs, delays, chargebacks, further ending up with payment disruption. 
  • Difficulties in Remittance: Reconciling multiple invoices and processing remittance data in a traditional system often becomes cumbersome, firstly because there’s a risk of missing data elements in the files, and secondly the lack of back-office support.

According to the business consultants, with so many unmet needs, the B2B payment premises was already ripe for disruption. And, the implementation of automating accounts payable and receivable functions, and invoice financing are bridging this gap in both cross country and domestic B2B payments.

The Current Trends in the B2B Payment Landscape

We are already in an era, where cash flow between businesses are steadily disappearing with advanced payment methods becoming a mainstay. The pandemic has made it more so evident over this period. Even the credit card transactions no more holds significance in the recent times. Pure-play digital banks or Neo banks are disrupting the payments segment rapidly. The current trends in the B2B payment has is marked with several technology-dependent advancements. Business consultants in the financial  landscape has observed this:

  • Credit card/online payments are replaced by payment solutions of Amazon, Google, Apple, Paytm, Wechat, and Alipay. 
  • Digital wallets eliminates cash/cards and even the ATM visits 
  • Real-time payment platforms making business checks invalid

Covid- 19 Accelerates the Dependence on Digital Payments Even More

While the employees are forced to work from home following the outbreak of pandemic, vital cash flows are trapped in paper. Quite obviously, suppliers and buyers are stuck in a standstill with opportunities slipping away in this troubled times. Though many companies have digitized their A/R transactions by now, in most cases departments handling the accounts payable and receivable transactions are lagging. Such a scenario has made the digital payment ecosystem in the B2B segments even more survival imperative.

Enter the Customer-First model of “Neo Banks”

In the wake of digital disruption in the B2B payment ecosystem, Neo Banks are taking everything in its stride. These cloud-based business banking outfits are offering innovative services & offerings where the traditional banks with physical presence are falling short. From account opening, P2P lending, expense management, basic accounting to prepaid and credit card management, neo banks like Open enable everything in real-time without breaching security standards.

What’s more! These cloud based platforms facilitate easy and effortless bulk payout, especially in the B2B segment. As a result, corporates reluctant to deploy UPI, RuPay due to transaction limitation can easily get their payment digitised through neo banks. 

Lately, business  consultants are also emphasizing on the successful partnership of the entrepreneurs with these cloud banking outfit to streamline payment ecosystem with the following solutions.

  • Automated payment tracking without the requirement if UTR number 
  • Customizable expense management on a daily basis 
Intuitive invoicing systems which eliminates manual intervention

In a market dominated by the traditional banking set ups, neo banks are appearing as a light of hope. With their customer-first models, they are not only catering to the woes of SMB segments, but also the big conglomerates are now depending on the digital facilities offered by the neo banks.

The Final Takeaway

However, the tedious and error-prone process of A/R transaction are still in place, posing hitches behind every touch points even in this age of disruption. But a steady shift from this disparate, age-old practice is quite perceptible, which will revolutionize the B2B payment segment in the years to come. 

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