Three key trends for B2B payments in 2023

Payments Orchestration
Payments orchestration allows businesses to route payment flow from all its payments service providers (PSPs) and payment methods, into a single place. Where previously businesses relied on manual processes to manage each individual account, a payments orchestrator offers a single cloud-based platform, through which a business can manage all its payments, deal with fewer providers, and significantly reduce the number of failed transactions.

B2B Buyer and Supplier experience
Despite a considerable rise in virtual card use in Europe for B2B payments, this popular business payment method can still become more efficient and easier to use, as many benefits sway in favour of the buyer.

Currently, buyers and suppliers must still access multiple portals to track payments manually. Technologies like straight-through processing (STP), which automate the payment process through next-gen API integration to support real-time payments and merchant enablement, will become more widespread.

As STP can integrate with enterprise resource planning (ERP) systems and platforms to support reporting and reconciliation for both accounts payable and receivable, we’re already seeing innovative corporations using the technology.

PCI scope is significantly reduced as well, as neither the buyer nor the supplier handles the raw card details. It also became possible to process large ticket transactions without worrying about acquirer ceiling limits, all of which extends working capital and ensures prompt payment. STP itself is not a new technology, yet 2023 will see it finally be put to use in the way it was intended – to automate and secure commercial card transactions for both buyer and supplier.

Greater collaboration
Collaboration between schemes, banks, fintechs, and back-office system platforms will drive growth in 2023 for both B2B buyers and suppliers. Integrating payment solutions with back-office systems will remove unnecessary processes and ensure payments are aligned with all business areas, such as accounts payable and receivable.

Issuing banks with an acquiring division will take a more significant step towards using flexible interchange, in 2023, to deliver maximum value. This will drive commercial card use and acceptance by offering reduced merchant service fees for the supplier whilst reducing any potential buyer rebate. Again, there must be a balance of benefits to all parties in the payment flow, which is achieved through greater collaboration. Together, this will help take B2B payments into the 21st century.

Challenges and opportunities for B2B payments in 2023

Economic strife
Rising inflation and recession continue to impact businesses globally, regardless of a company’s size. Margins will take a hit, forcing cashflow to become more crucial than ever. Technologies that can ensure prompt payment for suppliers and enable more cost-effective processes for buyers will be key to the survival of businesses in 2023.

We can also expect more businesses to use commercial credit cards that allow these organisations to extend their days payable outstanding (DPO) to suppliers, thus maximising the working capital while minimising the supplier’s days sales outstanding (DSO), and removing the cost of cash collection. With many economists predicting interest rate potentially of 6%, commercial cards can offer a flexible and faster payment option.

Juniper Research forecasts that the volume of B2B domestic cheque payments will decline by 30% globally between 2021 and 2023, with cash payments falling by 11% over the same time period. Yet, 85% of business retain some manual elements in the payment process. B2B payments are more digitised in Europe, while a gap between B2B and B2C payment digitisation remains. This presents opportunities for businesses to work and operate smarter by digitising B2B payments.

  • Buyers using commercial credit cards should look to integrate digital B2B payment technologies, such as STP, as part of their standard offering. Buyers that can offer smarter and more efficient payment processes that realise process efficiencies and reduce overall costs will be able to pass the savings onto their own customers and compete on price in their own markets, while maintaining under-pressure profit margins.
  • Suppliers can succeed by offering a variety of digital payment methods. This ensures clients can pay via their preferred payment method to give themselves the best chance of securing customers, and then get paid quickly to create cash flow into the business. Where commercial cards were once considered too expensive, now the method has become popular amongst corporate buyers. Suppliers ignoring such requests from buyers risk losing tenders or cashflow to bad payers.
Catalysed by the pandemic, the last few years have witnessed immense innovation and digitisation in the B2C payments market. 2023 will mark the year that B2B payments experiences a similar transition. Upcoming global economic challenges are set to put all businesses under huge stress, so businesses must identify key trends and opportunities to find ways to reduce costs and improve the customer experience. Next year, more than ever, this will be essential for businesses to overcome continued challenges and drive sustainable growth.

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