Historically, B2B payments have been slow to adapt to automated payments, but COVID may be the vehicle to forever change how business payments are processed. Josh Cyphers, President of Nvoicepay, a FLEETCOR company that transforms the way firms pay their suppliers, provides insights into the changes and trends businesses are experiencing in B2B and mobile payments and how it’s impacting businesses moving forward.
What are some of the notable trends driving B2B payments?
Paper checks still reign supreme in B2B payments, but COVID has created a compelling event that is pushing companies toward fully automating payments. This is a significant shift. Over the last 10 to 15 years, check use has been ticking down ever so slowly. According to the 2019 AFP Electronic Payments Survey Report, organizations made 42% of their supplier payments by check in 2019, down from 81% in 2004.
Now that accounts payable departments are working remotely, companies are trying to minimize the amount of manual work that requires trips to the office or to employees’ homes to get them to sign checks.
Suppliers are asking to be paid electronically because they get the money faster and don’t have to go to the bank. It will be interesting to read the 2020 AFP report and see if the pandemic pushes organizations to finally give up checks.
The other shift that’s happening is an extreme focus on managing cash. Given the economic environment we're in, a lot of companies are evaluating ways to conserve cash. They’re looking at the timing of payments, extending payment terms to suppliers or delaying payments.
With an automated solution, all of the payment approvals and workflow are online. You have visibility into every payment as it moves through the system, and that gives you precision control over cash flow.
What are some innovations you’ve noticed in contactless payments lately?
In B2B payments, I would define “contactless” as not having to do manual work. Cloud-based software is enabling accounts payable departments to automate work they’ve previously had to perform manually. That includes the handling of paper checks but also a lot of the work that goes into electronic payments, which has historically been done through banks.
For example, if you want to do ACH payments, you have to pick up the phone or send out emails and collect suppliers’ banking information and probably manually key that into a system.
For card payments, you have to phone or email to find out who will take a card payment. Then you might need to phone the supplier with the card number, and they enter it into a terminal. There’s a surprising amount of manual work to be done to electronically move funds through the banking system.
The cloud is what enables payment automation providers to transform that disjointed process, with all its manual touchpoints, into a single automated workflow.
The cloud also makes implementation very fast and easy. An organization can now accomplish automating payments in a matter of weeks.
How has COVID-19 impacted mobile payments?
A cloud-based solution allows accounts payable professionals to make payments anytime, anywhere. Up until COVID, that kind of mobile capability was a nice-to-have, not a must-have, for business payments.
In my finance career, I’ve never seen an accounts payable team that was completely remote. With everyone in the office, mobile just wasn’t a consideration. The construction industry is one exception; in that industry many of the people who approve payments are out in the field, so mobile capabilities are a real selling point for a payment solution. Now that accounts payable teams have been out of the office, every industry is looking for payment solutions that allow them to work remotely as much as possible.
What do you see as the biggest future trend for mobile payments?
B2B payments are about 10 times as big as consumer payments, yet adoption of cloud-based solutions is still in the single digits. Given the size of the market, the adoption of mobile payments by businesses is a powerful trend in and of itself.
Mobile payments have changed consumer life by making payment so easy and convenient that you hardly have to think about it. That has had a huge impact on how we live our lives and sped up commerce while increasing our options. When you think about that same kind of frictionless mobile payment experience becoming widespread in the business world, which it inevitably will, I think it will fuel all kinds of innovation and change.