Where do B2B commercial cards fit into the world of digital payments?

Pat Bermingham, CEO of B2B payment specialist Adflex, explains how digital business payments technology is helping to transform the speed, security and convenience of commercial cards.

UK suppliers have faced continuous new challenges over the last few years. From uncertainty and indecision over Brexit, to lockdowns and global disruption under the pandemic, many suppliers have had to focus all their efforts on just surviving. Meanwhile, buyers have been forced – some for the first time in years – to find and consider new suppliers to work with.

Cashflow is key, not just to survival, but to growth. Timely money transfers in and out are crucial for businesses of any size, yet many are still using outdated ways to manage their payments. Why? Fear of the unknown, security worries, and apprehension over cost and implementation timeframes are all common concerns, but the fact is that digital payments are changing fast.

Digital B2B payments are increasingly tailored to improve buyer and supplier relationships, provide a host of automated benefits and can work in partnership with multiple card providers.

Where do B2B commercial cards fit into the world of digital payments?

Commercial cards and straight-through processing (STP) are getting more and more attention from buyers and suppliers. Corporates are increasingly paying their suppliers by commercial card to extend their days payable outstanding (DPO), maximising working capital while minimising the supplier’s days sales outstanding (DSO) and removing the cost of cash collection.

Commercial cards have been around for years, but have been hampered by security concerns, incompatibility with existing financial systems and supplier acceptance. More recently, virtual commercial cards, which can be rapidly created to secure new transactions, have helped allay these concerns and improve security. But the ongoing problem with commercial cards is that they have existed only in a way that favoured the buyer. Until now.

Innovations in B2B payment technology now enable a more equitable balance between buyer and supplier, removing the need for additional processes on the supplier’s side, which have long been a barrier to them accepting card payments.

In part, this is possible thanks to advanced supplier enablement – in other words an acquirer-agnostic platform that facilitates seamless integrations with existing banks, or the ability to set up a MID (Merchant Identification Number) at preferential rates to improve conversion. It also means there is no longer a requirement for the supplier to need a payment gateway, further reducing the cost of card acceptance.

The key innovation, though, is automated straight-through processing (STP). It essentially reverses the way traditional payment processes work to fully automate business payments and grant greater control over cash flow. Rather than buyers waiting for suppliers to ‘pull’ payments from their commercial cards using software provided by a payment processor, STP allows buyers to automatically ‘push’ payments to their suppliers.

Not only does this significantly speed up payments, thereby supporting compliance with Prompt Payment Code requirements, but it can drastically improve supplier relationships as well.

STP can also safely store an existing card estate or work in partnership with virtual card providers. This overcomes one of the main challenges with virtual cards, namely, having too many. Although businesses appreciate the security that these ‘one-off’ cards provide, some issuers will generate a single virtual card for every supplier payment. This means suppliers must manually process a payment each time they receive a new card. Not particularly convenient.

STP removes this issue entirely. Suppliers get paid, fast. Buyers have a clearer picture of their finances.

Increasing choice, removing complexity

Digital B2B payments may seem complex – and they can be for those of us working to keep them secure while boosting convenience – but for businesses making them, digital payments today couldn’t be simpler. Automation increases the speed of payments and remittances and confirmations are sent instantly.

Intelligent APIs enable seamless integrations, hosted in the cloud, that automate Accounts Payable (AP) and reconciliation for the buyer, while automating Accounts Receivable (AR) for the supplier. Suppliers do not have to wait for buyers to share card details; in fact, the supplier does not need to handle the card or transaction at all, it is managed instantly for them. This reduces the PCI compliance burden many businesses face.

Some businesses, however, fear that automation means less control or awareness of their finances. In digital B2B payments, it is very much the opposite. It can enable enhanced analytical tools to help identify ‘cardable spend’, known acceptors and potential targets. A payload of information can be returned to the buyer and payment platforms can also fire off email remittances in any language to the supplier once a payment is made.

Smarter payments as a USP

In today’s digital world, it’s not just what goods or services you are selling that is attractive to buyers, it’s also about how they can pay. If you are able to offer the buyer their preferred payment method, you make yourself more attractive as a supplier, while also making it easier for funds to be remitted to you quickly and efficiently.

At a time when we’re all working with more digital tools than ever before, it’s time for businesses payments to join the revolution. Buyers and suppliers will not only get greater control over their cashflow, but they can establish the closer long-term relationships that are critical to stability and success in the future.

Why are more businesses using straight-through-processing to manage their transactions?

  • Fully automated payments.
  • Minimal to no development to current processes.
  • Greater control over cash flow.
  • Improved supplier relationships.
  • Significant operational efficiencies and financial savings.
  • Better financial decisions through enhanced data capture.
  • Highly secure and reduced scope with PCI and scheme compliance.
  • Enhances existing corporate card programmes.