It shouldn’t be a surprise that many small and big businesses still rely on paper invoicing. Processing payments this way has been entrenched within accounting departments for years due to their complex nature. These transactions usually involve multiple stakeholders, are linked to payment orders and budgets, and are managed manually.
What comes with this method of accounting is stretching standard payment terms, particularly in industries like construction, and this causes considerable pain for buyers and suppliers alike.
The Downside of Supply Chain Payments
According to Payments Source, the high volume of human and capital resources required to set up and maintain supply chain finance processes means buyers often struggle to onboard new suppliers. This process is called “overhead”, and it can be so cumbersome for buyers that many limit the number of supplier partners they are willing to work with. Which means buyers are missing opportunities by interacting with only a fraction of the overall supplier market.
Digital Payments Make a Difference
Thankfully, digital payments integration and the rise of B2B card payments in the supply chain are enabling dramatic change. The Association of Financial Professionals found that in 2004, 81% of B2B organizations paid by check, but by 2016, this number shrunk to 51%.
With digital payments use increasing, buyers, acquirers, and suppliers can all plug into independent payments platforms that offer simplicity and efficiency by doing the invoicing, payment, and reconciliation without human effort. This creates significant process efficiencies by freeing up internal resources for all parties involved.
Digital card payments enable large parts of the payments process to be automated and streamlined, reducing administrative headaches for both buyers and suppliers. Thanks to this automation, AR departments do not waste time and money looking for lost invoices, cut cycle time from 3-4 weeks to just a few days, and avoid stretching payment terms and making late payments.
And employees are free to focus on strategic tasks instead of pushing paper. According to The Fintech Report, companies using digital payment automation can boost their bottom line by 0.5%.
Buyers and Suppliers’ Partnerships Flourish
Finally, this digital automation of payments turns buyers and suppliers into partners who thrive when secure and traceable information flows freely. Digital payments are fundamentally changing the way buyers and merchants find, evaluate, and interface with one another.
The financial supply chain is no longer about exchanging invoices and waiting for payment, but about building successful relationships and communication. Instead of dealing with tense calls between suppliers and buyers, companies can build relationships and negotiate better terms and discounts. All parties benefit from the added value accessed through the application of flexible technologies that bring buyers, suppliers, issuers, and acquirers closer together.
Learn More About B2B Digital Payments:
Contact us online or call 1-800-621-8931.