5 B2B payment trends that can optimize your cash flow now

Although consumers have fully embraced digital payments – peer-to-peer mobile apps, electronic bill-pay services and getting paid via direct deposit, to name a few – many companies are slow to adopt modern electronic payment technologies.

In fact, last year a third (33%) of all B2B payments were still being made via paper check, according to the Association for Financial Professionals.

But some rapidly growing trends suggest that B2B payments will be moving very close to 100% digital very soon. Here are the five key trends accelerating the shift.

Suppliers want to be paid faster

Your suppliers have undoubtedly experienced the benefits of getting paid faster with digital B2B payment options, and are no longer willing to wait days to weeks for a check to arrive in the mail. Some of them may be pushing for same day ACH, which makes electronic B2B payments within a business day possible.

In addition, many business payers are looking for more efficient ways to:

• simplify making B2B payments
• ensure suppliers are getting paid in a timely fashion, and
• get more visibility into transaction data.

More digital B2B payment solutions

Until the past few years, the only alternatives to checks were credit/debit cards, wire transfers or traditional ACH transfer (which could still take five to seven business days). But attractive B2B digital payment solutions – such as real-time payments, which initiate, clear and settle payments in seconds to minutes – have emerged.

Research from PYMNTS found that 86% of U.S. businesses that generate at least $500 million annually use real-time payments. Fifty-three percent of survey respondents said real-time payments improve cash flow management. Another 33% reported that real-time payments offer more transparency into their payment process.

Another popular option for paying suppliers quickly, efficiently and at a lower cost is virtual cards. They’re specifically designed to protect against fraud, making them more secure than traditional business credit card transactions.

The use of virtual cards is growing at a pace that’s hard to ignore. The market’s expected to grow from $278 billion in 2021 to more than $1 trillion in 2030, according to Straits Research.

Tech for streamlining accounts payable (A/P)

Today’s technology solutions allow companies to streamline their payment processes by outsourcing manual A/P tasks. Integrated payables solutions, for example, allow companies to put together one simple file of suppliers that need to be paid and the amounts. The integrated payables company then handles the coordination of the payments with each supplier and determines which payment method is the most cost effective.

A well-designed integrated payables system means A/P spends less time managing and reviewing supplier payments and can concentrate on more strategic tasks, such as performing data analysis and strengthening relationships with contractors and vendors.

In addition, it provides more clarity into payment transactions since notations can be made that specify what payments are for and how they’re being applied.

Early payment discounts gaining popularity

Because suppliers want to be paid faster, many have started offering early payment discounts to their business customers. Unlike a rebate received after a payment transaction, an early payment discount is immediately recognized. So for example, if you agree to pay within 10 days, instead of 30 or 60 days, the supplier could knock 1% to 2% off your total bill.

The savings from early payment discounts can really add up and provides an incentive to make digital payments that’s difficult to pass up.

Cost of B2B payments is coming down

The shift toward electronic payment options is driving business costs down. Checks are expensive and time-consuming to issue, with estimates suggesting the average cost of issuing one check to be $1 to $26 once postage is factored in. And that doesn’t include the labor costs involved with cutting a check.

Digital payment solutions can significantly lower the average cost per supplier payment. Virtual cards can even make money by earning rebates.

Integrated payments solution

Being able to utilize as many B2B payment types as possible – including the latest digital payment methods – is a competitive advantage. And integrated payables solutions offer the best of all worlds: multiple, fast payment options to suppliers and more efficient and effective A/P operations, all while driving cost savings with rebates and discounts.

On top of that, your suppliers are likely to appreciate the convenience and flexibility so much that you’ll win their valuable trust and loyalty.