The landscape of B2B payments is witnessing a rapid transformation, propelled by technological advancements and the emergence of new payment providers and channels. Take a trip on the B2B payments highway to see the evolution.
THE PAYMENTS HIGHWAY: A CONTINUOUS EVOLUTION
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Historically, the bulk of B2B payments involved manually printed and mailed checks, a process fraught with inefficiencies, high costs and a heightened risk of errors and fraud. While the shift from paper checks has been gradual, the need to modernize payment processes and systems has never been more imperative.
Organizations previously encumbered by disparate systems and multiple banking relationships faced significant challenges, including a lack of automation, insufficient controls for approvals and routing, and diminished visibility over outgoing payments.
The past: Manual, costly B2B payments
Recognizing the manifold advantages of centralizing and standardizing payment processes, businesses are increasingly adopting measures that heighten control, diminish expenses, enhance visibility of cash flows and lower fraud risks. They are also adding real-time fraud detection services to help with incessant monitoring to catch fraudulent activities as they happen. These consist of the use of machine learning algorithms to sift through vast datasets for anomalies and a multi-layered approach to ensure comprehensive coverage against fraud. Additionally, companies are recognizing the benefits of APIs, which can help simplify bank connectivity and offer broader and easier access to the payment ecosystem.
Although checks persist in the U.S. for B2B transactions, their usage is waning. According to the 2022 AFP® Digital Payments Survey Report, checks now represent only 33% of B2B payments in the U.S. and Canada, marking a 9% decline from 42% in 2019. The migration towards virtual card programs supported by vendor enrollment services not only eliminates the costs associated with payment execution but also liberates accounts payable staff from the labor-intensive vendor registration process.
The present: Streamlining and optimizing payment processes
With an AFP survey indicating that over 75% of businesses anticipate utilizing real-time B2B payments within the next five years, the urgency for companies to adapt and leverage the latest payment solutions is paramount. The future heralds a continuum of innovation in payment channels, real-time transactions and sophisticated strategies for fraud prevention. To remain relevant and competitive, businesses must proactively modernize their payment technologies, ensuring they are not only prepared to navigate the dynamic payments highway but also poised to seize the myriad opportunities that lie ahead.
In the rapidly evolving payments landscape, standing still is not an option. Embark on your journey to modernize and future-proof your payment systems today to ensure your organization stays ahead in the race.
Looking ahead: The future of payment innovation
Modernize Your Payment Processes Today
By transforming your payments technology to today’s digital standard, FIS can make sure you adjust to the demands of tomorrow.
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Adoption of automated reconciliation solutions has been driven by margin pressures, the regulatory landscape and the emerging remote work environment.
WHAT LEADING FIRMS ARE DOING:
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RUN – streamline business operations and ensure efficiency.
CONNECT – build deeper, lastingrelationships with customers.
GROW – identify and leverage opportunities to generate revenue.
Match rates: Straight-through processing is contributing to match rates of 90% and above, replacing moderate rates of 50-60%
Technology: A single third-party software solution is replacing a patchwork of vendor offerings and in-house built applications
Operational approach: Centers of excellence are replacing fragmented processes
Exception handling: Escalation and execution management are fully automated, with processes clearly defined, replacing ad-hoc management
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Self-service by the business unit and configurable reports are key characteristics of today’s reconciliation solutions.
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Manually matching transaction details, verifying balances and identifying any discrepancies was a labor-intensive process that required significant effort, making it prone to errors.
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The Future
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Track the evolution of reconciliation to understand where we’ve been and where we’re going.
The Past
The Present
Monitoring: Automated daily reports with detailed status tracking are replacing limited reporting and indicators
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