Deloitte and Visa predict the future of B2B payments
Deloitte, in partnership with Visa, recently released the ‘B2B Payments: 2015 Australia and New Zealand Research’ report after surveying 150 medium and large organisations to understand the key B2B payments metrics and trends.
The report’s release is timely, with B2B payments continuing to evolve at a rapid pace as technology and commercial organisations of all sizes are under continued pressure to improve efficiency and effectiveness.
Key findings confirmed that digital payment methods and card-based solutions are consistently evaluated as being better, faster and cheaper than alternative mechanisms.
Indue CEO Manuel Garcia highlighted the three biggest B2B payment trends emerging from the report as:
The evolution of cards
Card-based payments have evolved to become comprehensive digital payment and reporting solutions that are often integrated with financial systems for additional automation benefits.
Corporate cards have typically been used as a tool to manage employee expenses, eliminating the need for invoicing, reconciliation and cheque-based payments for travel and entertainment expenses and replacing petty cash for low-value consumable segments.
The report found a significant shift away from traditional usage, with more organisations realising the potential of digital payment and reporting solutions for a range of B2B payments. Sixty one percent of suppliers reported spending less effort in chasing payments, 60% claimed better customer relationships, and 51% reported improved reconciliation.
Card issuers and networks have also further evolved their commercial card products to help replace traditional manual purchase order (PO) processes for a broader range of B2B payments through tools such as virtual accounts.
These are delivered to the buyer as a digital account (a 16 digit number instead of a physical plastic card) that can be used by accounts payable departments to centrally settle invoices through online payments or card-not-present transactions. This has expanded the procurement segments that can be settled electronically.
The shift from manual to electronic processes
Regardless of the underlying payment mechanism, most organisations have, or are moving towards, automating their procure-to-pay processes, moving away from a physical card to digital solutions and payment platforms.
Most organisations have, or are transitioning to, tracking and managing purchases electronically from procurement through to payment settlement.
Buyers also indicated a willingness to pass on part of the cost benefit to their suppliers in the form of early payment and settlement of invoices, in return for end-to-end procurement process transparency and efficiencies.
New and evolving financial technology players
Banks, payment technology businesses and service providers are increasingly partnering with fintechs to enhance the reporting, reconciliation and/or automation of various parts of their procure-to-pay processes.
This approach is enhancing core payment and financial capabilities and embedding digital payments as part of the business workflow to improve efficiency, business intelligence, innovation and decision-making.
Deloitte reports these new technologies, and digital solutions, are changing the way payments are being made and received, with card and digital account payments 70% more cost effective than a traditional purchase order process.
While the report found digital and card-based payments are bringing significant benefits to Australian businesses, it also found that many have yet to make the switch and are missing out on real efficiencies.
The full report can be read here.