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Digitisation matters

22 Mar 2019 05:30

Making business-to-business payments simpler and more connected

These days, you don’t think twice about tapping your card to pay or jumping in an Uber without handing over any cash.

Digital payments have become a huge part of our lives in the past ten years. Contactless, invisible and mobile payments leave consumers spoiled for choice. They expect frictionless experiences in their everyday lives and are quick to accept digital payments as the most accessible way to pay.

But for business-to-business (B2B) payments, it’s an entirely different picture. In fact, surprisingly it is estimated that around one quarter of payments are still made by cheque. But why?

Take a small, independent gym and their clients’ memberships, for example. How do the owners collect these payments? Gym-goers probably send money to the gym’s bank account, pay cash in hand or even write cheques. The repetition of accepting monthly or annual payments, organising memberships and invoicing can make things really complicated.

The gym owners might have their clients’ details stored on a giant spreadsheet, which they then have to trawl through to find the right information to send the right reminders and invoices to their members, track payments back, and then match those invoices to the payees. It’s enough to make you sweat.

By digitising the payments processes, small business owners benefit from integrated systems, lose the weight of stressful processes and hit their goals all at the same time.

The thing about B2B payments…

…they’re massive. In fact, a recent survey done by ResearchAndMarkets.com states that half of all global B2B payments are already made electronically, and signs show the market moving further towards digital transfers over the next two to five years. So getting B2B digital payments right is a big deal.

And despite being massive…

…it’s still not a perfect system. Although half are electronic, a huge amount of the remaining B2B payments are still manual, slow and fragmented. Paper invoices can result in large Accounts Payable teams that can be costly to organisations, and companies often use multiple payment methods or bank accounts, depending on the supplier, their industry or the platform being used. Put simply, it’s complicated.

The future is coming

New technologies including big data analytics, Artificial Intelligence, machine learning and instant payments are predicted to help businesses reduce the complexity in B2B payments as well as tackling payment delays.

“That’s what digital payments enable you to do,” explains Maria Parpou, Managing Director, Barclaycard Commercial Payments. “They can increase productivity, increase efficiency, cut out bureaucracy and a lot of other waste. We are looking to increasingly integrate payments in the world of business. We’ve created solutions that reconcile payments against invoices, so we can make sure the invoices match the payments received. We are striving to embed  those B2B payments into the fabric of daily life and the ecosystem of a company.”

Being disruptive – it’s a good thing

The B2B ecosystem is being disrupted by so many different innovations. From micro-segmented supply chains and the digitisation of invoices, to blockchain and e-commerce platforms. Digital payments provide a rich set of data which is important to companies. “It’s not enough to fulfil a payment,” explains Maria. “Customers want detailed payment data at their fingertips, and through digital payments, we can provide very detailed reports which can be interrogated and provide valuable insights to improve cash flow and supplier strategies.”

Barclaycard Commercial Payments recently announced an exciting new partnership with SAP/Ariba. The partnership will see Precisionpay, our own B2B payment product, link with SAP Ariba solutions. Precisionpay combines the perks of card payments for buyers with the cost-effectiveness of bank transfers for suppliers. It’s a win-win partnership that will bring payment and procurement together to give customers a simple and seamless experience.

The tech

As well as Precisionpay, Barclays is pursuing other key areas of innovation around digital payments and open banking and is exploring new ways to improve and simplify B2B for the industry. Virtual cards are one area in digital payments causing stir. These ‘cards’ are completely virtual – a unique, 16-digital card number is generated then tied to the account making a payment. Through API integrations, the platform can capture all the payment information automatically and send it securely to suppliers. It’s a single-use way of making payments more secure with no paperwork in sight.

Meanwhile, open banking is accelerating connectivity and delivering financial data through third-party software or platforms. These days, platforms are considered the new business highways, taking customers from procurement all the way to reconciliation quickly and efficiently. It’s all about making things simpler and more connected. Maria says, “In reality, everything is very interwoven. The biggest challenge we face is redefining the old payments boundaries to better fit the digital age. We want to bring solutions our customers want to the market.”

With the growth of global B2B e-commerce set to continue at pace, related solutions will continue to evolve and improve. And soon, it might be all just as smooth and simple as paying for an Uber.