The adoption of business-to-business (B2B) digital payment solutions has been accelerated by the pandemic but will continue post-COVID, driven by the many benefits they provide, RJ AnconaVice President and General Manager, B2B, Global Merchant Services and Network at American Expresssaid PYMNTS.
Purchasing organizations have leaned into Accounts Payable (AP) automation solutions, including virtual cards, and vendors have adopted Accounts Receivable (AR) automation platforms that streamline the receipt of digital payments .
The difficulty of paying by check during the pandemic accelerated adoption, but businesses quickly discovered other benefits, including improved cash flow and visibility. “I see this as a trend that will continue as accounts payable and accounts receivable departments seek efficiencies,” Ancona said.
Enable a win-win for buyers and suppliers
Suppliers, in turn, benefit from increased visibility and the confidence that they will be paid faster. Thus, more and more of them are accepting digital payments and adopting other solutions such as portals and supply chain finance operations.
Virtual cards make payment more efficient by eliminating manual processes like data entry and streamlining reconciliation. For suppliers, they increase communication and alignment on invoices and billing.
Read more: How virtual cards are reinventing the way companies pay their suppliers
For shoppers, they offer an extra layer of security and control, as single-use virtual cards ensure that only particular charges or bills are authorized. They also offer buyer rewards and cash back.
“You won’t get those features on things like ACH or debit cards, so we’re seeing more and more companies find a win-win situation between buyer and supplier associated with that,” Ancona said. .
Helping B2B catch up with consumer trends
The use of virtual cards is growing, especially in verticals such as manufacturing, construction, industry, advertising and media, where timely billing over a defined period is essential.
“We’re keeping an eye on things like shipping, business services, food services and various B2B industries where I think we’re going to see that grow more and more as digital infrastructure really catches up to where are small businesses and consumers,” said Ancona.
Businesses are also devoting an increasing share of their daily spend to digital, with various forms of virtual cards and digital wallets.
“There are a number of things American Express is doing to continue to grow in this space as well as the B2B space,” Ancona said. “So I would say that this trend will be just as prominent among consumers – it might just happen in a slightly different way.”
Maintaining flexibility in times of uncertainty
An ideal B2B digital payment is frictionless, Ancona said, and doesn’t involve a lot of back and forth between buyer and seller. He also optimized free float and cash flow for both parties.
“I recognize that we often talk about back-office efficiency between companies, but the most important thing is that your buyer, buying from a supplier, has a good experience, and the supplier who receives payment from the buyer should also have a good experience,” Ancona said.
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Ancona said 2022 will be about flexibility between buyers and suppliers. As spending and trade continue to grow, many industries still face unpredictability.
“One of the things we spend a lot of time with businesses is helping them maintain flexibility,” Ancona said. “I think embracing B2B digital payments also gives you more flexibility in how you optimize your spend and how you streamline commerce in this environment where there are a lot of unknowns.”