August 13, 2024
“Digital payments once revolutionized commerce. Now, commerce will revolutionize payments, making them an invisible, invaluable part of an elegant, customer-first commerce experience”, a key insight from Forrester’s The Future Of Payments report indicating how B2B payments are evolving.
The world of B2B payments has seen a remarkable change, moving away from traditional paper-based methods and manual processes. With the introduction of cloud-based, automated systems, this digital evolution has made the buying and selling experience much smoother, boosting both speed and efficiency for B2B buyers and suppliers in handling their business transactions.
In this post, we've highlighted some of the biggest digital payment trends for 2024 to keep you informed about the B2B payments industry.
The transition from paper checks to electronic payments has been on the rise in recent years. According to Gartner, by 2025, 80% of B2B sales interactions will be done digitally.
That’s reasonable as electronic payments offer various advantages like speed, cost-effectiveness, and quicker payment processing, eliminating the delays associated with traditional check payments.
Despite these benefits, the 2022 B2B Payments Survey Report by Bottomline Technologies revealed that 36% of companies still use checks for more than half of their payments. However, two-thirds of the respondents mainly rely on electronic transactions. Moreover, 49% of the survey participants showed interest in making the switch from paper checks to electronic methods like bank transfers or cards to enhance cash flow.
Payment automation utilizes technology to simplify the entire payment process, from initiation to reconciliation, boosting efficiency and accuracy.
By automating payment processes, businesses can speed up invoice creation and delivery, leading to faster payments and reduced errors. This trend towards financial efficiency is evident in a 2022 survey where 32% of US businesses planned to automate their accounts payable processes within the next year.
Automating accounts receivable processes, like tracking and following up on overdue invoices, can significantly decrease the time and effort needed to collect payments. This leads to better cash flow management through prompt collections. According to a study by PYMNTS and American Express, businesses using automated accounts receivable systems spent 67% less time chasing overdue payments compared to those using manual methods.
When talking about evolution, AI and ML can’t be left from the picture, especially given how they’re supporting the way businesses handle payments. By analyzing data in real time, they can detect fraud, optimize payment routes, and predict cash flow trends. This not only streamlines traditional payment processes but also provides valuable insights for making informed decisions.
Businesses can leverage these technologies to minimize risks, enhance efficiency, and improve overall payment operations.
According to Bottomline’s survey, 20% of businesses see AI as a key tool for reducing manual work in invoicing. Additionally, a study by Microsoft found that 79% of small business owners are eager to explore the potential of AI in their operations.
Real-time transactions take the spotlight in 2024, offering businesses the advantage of receiving funds immediately after initiating a transaction. This eliminates delays caused by bank processing times, ensuring a smooth experience. Studies are backing this up – the value of real-time payment transactions is projected to increase by 289% between 2023 and 2030.
Improved cash flow is a key benefit of real-time payments. Unlike traditional systems where funds can take days to transfer between accounts, real-time payments allow for instant access to funds, enabling companies to properly allocate resources. This accelerated cash flow boosts liquidity, fostering a more agile and responsive business environment.
By 2027, real-time payments are anticipated to represent 27.8% of all electronic payments worldwide, a significant increase from 18% in 2022.
As cybercrime continues to escalate, 2024 is poised to be the year when businesses of all sizes prioritize investments in technology aimed at reducing risk and safeguarding their financial information.
To protect their financial operations, companies will implement payment processing systems that use top-of-the-line encryption methods, tokenization, and sophisticated fraud detection capabilities.
Organizations will strive to identify and establish protocols related to financial regulatory compliance, onboarding processes, KYC, transaction monitoring, fraud detection, anti-money laundering measures, bank account validation, and tokenization. While some companies may tackle these complexities internally, others may opt to partner with specialized third-party payment providers.
As threats evolve, the implementation of such security measures will be essential for protecting sensitive information, securing assets, and maintaining the integrity of digital transactions in 2024 and beyond.
The use of virtual cards is on the rise, especially in the US, for various transactions like vendor payments, employee expenses, and online purchases. According to Juniper, global virtual card transactions are expected to increase significantly in the next few years. The total value of these transactions is projected to rise by 340%, reaching over $121 billion by 2027, with $71 billion coming from US businesses alone.
The convenience and security features of virtual cards make them a popular choice for B2B transactions. They provide businesses with added security, control, and flexibility. By issuing virtual cards for specific purposes, companies can minimize the risk of theft or fraud while streamlining expense tracking and management.
Digital payment solutions have existed for many years, primarily in the B2C industry. Nevertheless, there are numerous advantages to transitioning to virtual payment solutions in the B2B realm as well. Let's delve into these benefits and how they can positively impact your business.
Traditional B2B transactions often involve time-consuming manual processes and disjointed systems. However, digital B2B payment solutions are instrumental in automating and streamlining the entire payment process. By using digital payment solutions, you can effectively manage and record every transaction, eliminating the need to keep track of checks going back and forth between buyer and supplier.
Manual B2B payment processes are not only tedious and time-consuming, but they also pose a risk of human error and payment fraud. In contrast, digital payment solutions offer a more secure option, resulting in minimal to no errors. Virtual cards, for example, account for only 3% of targeted payment fraud compared to 74% for checks.
While electronic payments are not entirely immune to fraud, there are several measures you can implement to enhance security and minimize risks:
Ultimately, all parties involved in a transaction simply want to receive their product or payment on time, with minimal complications. Timely payments are crucial for building and maintaining strong client relationships. The more consistently you can make payments, the more reliable you will appear in the eyes of your customers, potentially increasing the likelihood of future business transactions.
The B2C sector has put the spotlight on a crucial lesson about payments: the future lies in flexible and digital options. Over the past ten years, innovations like mobile wallets and mobile point-of-sale systems have emerged in B2C environments, becoming some of the most favoured methods for online transactions.
In contrast, the B2B sector is in its nascent stage when it comes to embracing digital payments. With traditional processes deeply rooted in the industry, it may take a while for electronic payments to gain significant traction. Nevertheless, the momentum is unmistakably building in that direction.
Are you interested in learning how an Early Payment Program could benefit your company? Contact us at Quickly to discover how you can also achieve improved cash flow and operational efficiency.
Kyle is a seasoned entrepreneur with over a decade of experience leading innovative ventures. As co-founder and CEO of Quickly Technologies Inc., he's revolutionizing access to earned revenue for businesses, driving growth and efficiency.
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