For decades, corporations worldwide have relied on legacy tools and manual systems for managing their finances, a process that has increasingly become a point of friction and frustration. Historically, the role of a payments system was to simply process and reconcile a business transaction, and a company generally gave little thought to the effort it required. Many executives faced the question of whether to overhaul their business-to-business payments systems with reluctance.
These days, however, many corporate leaders are realizing that embracing payments modernization is critical to stay ahead of the curve. The accelerating pace of digitization and the emergence of powerful technologies have given rise to payments processes that are faster, more efficient and easier for businesses and their employees to manage. Amid the fallout from the global pandemic and continued economic uncertainty, those benefits create big opportunities for companies as they compete for market share. “Businesses today are very focused on operational efficiencies that can decrease costs,” says Chad Wallace, the global head of Commercial Solutions at Mastercard. “What we’re seeing is a big focus on reengineering the workflows around accounts payable and accounts receivable.”
Those who’ve made the leap are reaping the rewards of payment digitization efforts: More than 70% of chief financial officers report that the technology investments they’ve made since the beginning of the pandemic have improved their accounts payable (AP) and accounts receivable (AR) processes.1 And more than 60% of global companies believe that the faster payments enabled by digital tools are positively impacting their organizations.2
B2B Payments Trends to Watch
Wallace leads the digital transformation of corporate payments at Mastercard, a role that has given him a front-row seat as more companies are reimagining how they pay and get paid. Fears of economic slowdowns and tighter margins are pushing organizations to look internally for opportunities to use resources more efficiently and to automate time-intensive and error-prone payment processes. “They are looking for tools and capabilities that make the payables process and the reconciliation process simpler and more automated,” Wallace says, adding that these efforts can yield improvements in cash flow, revenue growth and customer satisfaction.
Organizations are looking for tools and capabilities that make the payables process and the reconciliation process simpler and more automated.Chad Wallace, Global Head of Commercial Solutions, Mastercard
New approaches to B2B payments can deliver more than just operational efficiencies. Artificial intelligence-powered capabilities are enabling companies to do more with their payments data by identifying cybersecurity risks, gathering critical insights to better manage their finances and even executing more sustainable financial strategies. As digitization continues to accelerate across the B2B payments ecosystem, generating vast amounts of data every day, the possibilities of applying AI become greater. At the same time, data security becomes more critical. Organizations need to have the right data-management technology in place to help future-proof their businesses.
Business leaders also are embracing the lessons learned from the evolution of the consumer payments landscape. These days, consumers expect seamless payments technologies at their fingertips. For example, they can hail a ride using their phone and exit the car knowing that the transaction has been completed, with little thought about the payment process itself. Increasingly, employees expect financial processes to be just as seamless and integrated within the business tools they already depend on. “Businesses are run by individuals, and all those individuals are also consumers,” says Craig Vosburg, Mastercard’s chief product officer and head of the company’s global Product and Engineering organization. “Their question is, ‘Why can’t this business process look and feel more like what I experience as a consumer?’ And the answer is that there’s no reason it can’t.”
A Three-Part Wave of Innovation
Companies across the payments industry—from upstart fintechs to market leaders such as Mastercard—continue to innovate and drive B2B payments into new territory. With the rise of application programming interfaces, or APIs, and the migration to the cloud, the steep adoption curve for innovative payment technologies is flattening. The seamless embedding of financial tools through emerging technology is helping to further drive the consumerization of B2B payments.
Meanwhile, powerful technologies such as AI and machine learning are unlocking more opportunities to reimagine B2B payments. Take Mastercard’s cloud-based analytics platform, Global Treasury Intelligence, which uses AI to power quality control of supplier and payments data, giving businesses insight into how and where they spend money. AI will continue to transform finance, treasury and procurement functions over the next several years, yielding even greater visibility into payment flows to help organizations make more strategic business decisions.
With the seamless embedding of financial services into existing business workflows, upgrading payments technology will become increasingly mainstream in the B2B world.Craig Vosburg, Chief Product Officer, Mastercard
The rise of advanced payment processing capabilities and new automated technologies are further transforming the way businesses accept digital payments. On average, studies show that 60% of AR teams see their current AR systems and processes as frustrating, but new solutions are streamlining administrative tasks to usher in a new wave of efficiencies. Rapidly evolving technologies are powering solutions such as the new Mastercard Receivables Manager, which will continue to simplify experiences for AR teams by freeing up time once spent manually capturing and entering virtual card transaction data to reconcile invoices.
A Future of Possibility
Wallace doesn’t expect the rapid pace of innovation in the B2B payments space to slow down any time soon. In fact, as more business leaders understand and embrace the considerable opportunities presented by the evolution of payments technology, he believes the swell of B2B payments innovation will develop into an even more powerful wave. “We’re at the cusp of a significant generational shift,” he says, noting that digital natives are ascending the ranks of organizations and taking on positions of authority. “We’ll see chief financial officers and chief information officers who are more willing to move to better technologies in order to adopt the newest features.”
Vosburg believes we’ll find ways to use AI in B2B payments that we haven’t even considered yet. “We’re going to see more interesting applications of AI streamline manual processes so people can spend more time on activities that add more value,” he says. Looking forward, he also sees an acceleration of advancements. “With the seamless embedding of financial services into existing business workflows, upgrading payments technology will become increasingly mainstream in the B2B world.”
- “Digitization Strategies: How CFOs are Prioritizing Digital Payments to Maximize Efficiency,” PYMNTS and Corcentric, Nov. 2022.
- “2022 AFP Digital Payments Survey Report: Key Highlights,” Association for Financial Professionals, 2022.
The Wall Street Journal article reference is here: