B2B Payments Lean Toward Consumer Transactions

It is no secret that automating B2B payments and managing them via an ERP system can improve the collections process, reduce the day sales outstanding (DSO) and streamline operations. According to a PYMNTS study, 49% of firms that have adopted automated accounts receivable (AR) processes report lower overall delinquency rates, 62% report reduced DSO and 72% report they have saved operational costs.

These join the even more common benefits of incorporating automated AR technology. Among these are faster processing speed (cited by 87% of those who have adopted this technology), improved team efficiency (79%) and a better customer experience (75%).

Late Payments Weigh on the Bottom Line

Many B2B firms have recognized just how detrimental late payments can be to their operations, prompting them to seek out digital solutions to free up more cash. A recent report found that 80% of B2B firms believe that late payments stemming from inefficient AR operations are threatening their businesses. It also found that 93% of firms must contend with negative effects because of their AR approaches and that 37% say their AR practices are preventing them from accurately predicting cash flow.

The study pointed to manual AR processes as the main factor behind this inefficiency: 99% of firms’ senior decision makers said that their organizations’ AR operations still featured at least some manual processes. Respondents noted that digitizing their AR processes could solve many of these issues, and 95% said that they should be investing more in technologies and innovation. A notable number of respondents also expected to see key benefits after digitizing some of their operations, including improved cash flows (expected by 32%), improved forecasting (30%), and cutting down on late invoices (27%).

Gathering and Managing Data at Scale

The chief benefit of such digital solutions is that merchants can gather and manage data at scale. Digitizing B2B payments data and managing it via ERP systems enables businesses to process far greater payment volumes more accurately than would be possible when using checks or automated clearing house (ACH) transfers, all while requiring fewer resources. Businesses can also analyze the same data and use it to automate security practices using algorithm-based fraud detection.

B2B automation can serve as a powerful tool to help businesses future-proof their payments operations. Leveraging cloud-based ERP solutions can make payments faster, safer, and more efficient while also supporting an increasingly remote workforce.