Finding The Tech-Human Balance In B2B Payment Optimization

Although it occurred under dire circumstances, 2020 was the year that many organizations finally ditched the paper check in B2B payments — or, at the very least, helped to move the needle toward electronic payments.

With 2021 on the horizon, those same organizations now have an opportunity to build on that momentum to not only migrate away from checks out of necessity, but embrace the benefits of electronic rails and workflows that can optimize B2B transactions for both buyers and suppliers.

According to Nasser Chanda, CEO of Paymerang, the pandemic forced many organizations outside of their comfort zones, and it led to a “challenging but transformative” year, he told PYMNTS. Now, with electronic processes in place in accounts payable (AP) and accounts receivable (AR) departments, businesses are in a more strategic position than ever before to elevate workflows and strengthen B2B relationships.

Chanda discussed his predictions for the B2B payments landscape in 2021, including how organizations will make progress in pursuit of the “perfect payment,” and what technologies like artificial intelligence (AI), robotics process automation (RPA) and application programming interfaces (APIs) can do to tackle some of the biggest pain points.

In Pursuit Of Perfection

The pandemic and work-from-home requirements left organizations to act fast when it came to sending or receiving paper checks. With some firms migrating to electronic payments out of necessity, they are quickly discovering the value-added benefits of digital transactions that go beyond overcoming the challenge of remote working.

But even if a business is sending ACH or accepting commercial card transactions, the processes and workflows associated with a B2B transaction remain complex, and they often cannot be remedied solely by adopting electronic payment methods.

“B2B payments are messier than B2C payments,” said Chanda. “You have invoice aggregation, multiple account numbers with vendors, short payments, disputes and credit memos.”

There are multiple processes involved with a single payment, and multiple parties involved in each process. Automation is key to driving efficiencies for both buyers and suppliers, but achieving it can be a headache, particularly when purchase orders or invoices are submitted as paper or PDF documents.

Several technologies are emerging as instrumental tools in this regard. Chanda pointed to AI that can automatically “read” and collect data from an invoice, for instance, or RPA to automatically apply cash when funds have been received. APIs have similarly become valuable tools to automate reconciliation and accounting via interconnectivity between AR, AP and accounting systems.

Collectively, these tools are enabling businesses and their third-party financial solution providers to zero-in on what Chanda described as the “perfect payment.” It’s a concept that involves the seamless, automated movement of documents and data between parties and through workflows, from purchase order to invoicing to payment to reconciliation. While organizations remain at varying levels of modernization, and while the B2B payment ecosystem remains far from this level of optimization, tools like AI and RPA will drive the industry forward and benefit both buyers and suppliers.

“As we create this environment, we will enable more accessibility to automation for all buyers and suppliers,” he said.

Empowering Finance Professionals

The advancement of technology is instrumental to this pursuit of B2B payments optimization. Chanda pointed to the importance of synchronizing processes across buyers and suppliers through coordination between payment rails and the workflows that overlay and underlay them as vital to this effort.

Yet, as he emphasized, humans continue to play an essential role in achieving the “perfect payment.”

For instance, the risk of B2B payments fraud continues to permeate organizations even as payments digitize. Often, the first line of defense against a business email compromise or vendor impersonation attack is the person sitting on the receiving end of those threats, making education vital to protecting company funds. While technology can help mediate the threat, human-led initiatives like verifying email addresses or vendor information is also key.

At the higher level, AI and RPA are empowering finance professionals to shift away from manual, repetitive tasks like bank reconciliation and invoicing, and toward strategic initiatives like vendor relationship and cash flow management, noted Chanda. While technology is at the forefront of B2B payments optimization, finance professionals have the opportunity to become “right-hand partners to CEOs.”

“The human aspect is critical in building a B2B payment solutions,” said Chanda. “Sometimes, it takes a human to check a payment, verify that a vendor is not an impersonator, or complete a phone payment… In the payment space, it is critical to know how to balance technology and human interaction.”