Over a long enough horizon, challenges represent opportunities for innovation, improvement and growth. That’s the case even when those challenges stem from behaviors that appear to be intractable, like the unavoidable prevalence of paper checks and legacy payment methods within the B2B payments ecosystem. But while progress within B2B payments may not be linear, it is […]
The post 3 Ways Legacy B2B Challenges Are Shaping Tomorrow’s Biggest Opportunities first appeared on PYMNTS.com.
Over a long enough horizon, challenges represent opportunities for innovation, improvement and growth.
That’s the case even when those challenges stem from behaviors that appear to be intractable, like the unavoidable prevalence of paper checks and legacy payment methods within the B2B payments ecosystem.
But while progress within B2B payments may not be linear, it is increasingly looking digital.
That’s because while firms’ legacy systems — often dating back to the pre-digital era — tend to work “just fine,” they were designed for an entirely different business paradigm and can struggle to keep pace with the speed and security expected across both sides of the transaction today.
Legacy B2B payment workflows hurt firms in three key — and avoidable — ways.
First, the persistent use of paper checks not only slows down transaction times but also contributes to errors and increased costs.
Second, the entrenched reliance on manual data entry and reconciliation processes hinders the ability of firms to make informed, data-driven decisions promptly, and leaves many businesses still grappling with a lack of real-time insights into their financial transactions and cash flow realities.
And finally, traditional B2B transactions often involve multiple intermediaries, leading to complexities and delays. The lack of seamless collaboration platforms can hinder the efficiency of supply chain processes.
Still, it’s not all bad news. Today’s B2B challenges can shape, and are already defining, tomorrow’s biggest opportunities.
Read more: 2024 Is the Year Businesses Put Technical Debt to Bed
By digitizing payments, embracing data-driven decision-making, and enhancing collaboration through FinTech ecosystems, firms can lay the foundation for a future where B2B transactions are efficient, secure and seamlessly interconnected.
“Businesses are becoming much more aware and much more savvy about how to operate digitally,” James Butland, U.K. managing director at Mangopay, told PYMNTS on Tuesday (Jan. 23), explaining that handling B2B payments offline comes with “a lot of admin, a lot of costs and time lost.”
Firms that embrace digitization have an opportunity to streamline their entire B2B payment ecosystem. By leveraging advanced payment technologies, firms on either side of the transaction can create a seamless, transparent and instantaneous B2B payment infrastructure. This not only accelerates transaction speeds but also reduces the risk of errors, fraud and operational costs.
Still, many businesses, particularly those accustomed to traditional payment methods, may resist the transition to digital processes.
The initial costs can be a barrier for smaller businesses or those with limited resources, slowing down the adoption of digital solutions. PYMNTS Intelligence found that 36% of small- to medium-sized businesses (SMBs) cite both cost and complexity as barriers to automating their accounts payable and accounts receivable workflows.
“People are afraid of new payment rails and deviating from the script,” Doug Brown, president of NCR Voyix Digital Banking, told PYMNTS in November. After all, “payments are a very complicated ecosystem.”
See also: Buy, Build or Partner? The Dilemma in B2B Payment Modernization
But in an ironic twist, it is failing to modernize B2B systems that is shaping up to be what will mire firms in an ecosystem full of more cost, and greater complexity.
That’s because digital payments provide a host of benefits that are simply not possible when firms rely on legacy methods, and businesses may be slow to embrace digital payments if they do not fully comprehend the advantages and how to leverage them effectively.
By implementing data analytics tools across B2B payment environments, businesses can gain comprehensive insights into their financial health, enabling strategic decision-making. This not only enhances risk management but also empowers businesses to capitalize on emerging market trends and opportunities.
By leveraging open banking APIs and digital platforms, businesses can foster seamless collaboration, automate supply chain processes and enhance overall efficiency. This not only accelerates the speed of transactions but also strengthens business relationships across the entire supply chain.
Implementing robust digital payment systems requires significant upfront investments in technology, infrastructure and employee training, but the benefits are obvious and relatively immediate.
“Companies are being pushed to innovate,” Enigma Technologies CEO Hicham Oudghiri told PYMNTS in November. “They have the technologies they need to innovate, and they have a lot more market adoption when they do innovate.”
As Ingo Payments CEO Drew Edwards told PYMNTS in November, “We’re moving beyond simply ‘kill the check.’”
The post 3 Ways Legacy B2B Challenges Are Shaping Tomorrow’s Biggest Opportunities first appeared on PYMNTS.com.
