Liquidity Trapped in Current B2B Payments

On paper, B2B payments are ripe for digitization.

The only problem is that so many B2B payments remain, ironically, stuck on actual paper.

It’s the 21st century, after all. Yet around 4 in 10 B2B payments made in the U.S. rely on paper checks and other outdated hoops to jump through. Today, despite technology that has changed every business, 4 in 10 B2B payments made in the U.S. are by paper invoices mailed to the buyer. Paper checks are eventually mailed back to the supplier, days or weeks later because the B2B space is entrenched in slow, outdated billing and payment procedures. Procedures that slow cash flow while the suppliers’ money is tied up in “financing” their buyers’ purchases.

In addition, there are multiple steps that a buyer and a supplier need to go through before a payment is made. Steps such as invoice management, purchase order management and other steps consume a high level of effort and time.

Solutions for Buyer and Seller

We witnessed the adoption of digital tools across industries take off during the pandemic, in the B2C space. We may not have noticed but the B2B space has not paid attention to buyers like consumer-facing businesses have, where meeting purchasing expectations with digital payments solutions can grow or literally close a business.

But there is a slow but growing awareness that the automation of electronic B2B payments can lead to better cost efficiencies, accelerate payments and cash flow and increase operational efficiencies for firms.

Because of today’s rising interest rates and lower availability of liquidity, there is pressure on buyers for access to credit and other options to make payments to suppliers. In today’s continually changing and expanding business environment, every edge counts.

Typically, late payments from 30 to 45 days in B2B cause operational inefficiencies, lead to higher costs, slow cash flow and can contribute to a strained buyer and supplier relationship. One of the main reasons for late payments is the manual approval process for invoices, which involves multiple stakeholders and steps.

That’s why investing in digital tools and automation solutions to address these challenges and speed up the procure-to-pay cycle, while adding flexibility to it, is crucial for sustainable success.

Not only that, modern digital and automated B2B solutions can help unblock working capital stuck in the historically manual payment procedures.

Invoicing and payment procedures in many businesses still rely on hand created invoices, folded by hand then stuffed into envelopes by hand. Stamped, then sent to the post office to be delivered days later to their buyers. Buyers then write checks, dependent on their cash flow, 15 to 45 days after receipt of the mailed invoice (if it is not lost in the mail) then the check is delivered days later, again by mail. The supplier or firm finally receives payment in 2 to 8 weeks, or more. Does this sound familiar?

Visibility and Transparency Connect the Buyers-Suppliers

Credit digitization has been cited as creating improvements by 77% of surveyed CFOs, and now 82% of companies have investment plans for working capital and credit technology, according to the B2B and Digital Payments Tracker® report.

The report also shows that nearly half (45%) of U.S. businesses that automated payments during the pandemic are already seeing improvements in terms of cash flow management and across other performance indicators.

Coastal Payment Systems has invested in digital solutions for both sides of the B2B transaction to help with operational efficiencies, lower payment processing costs, accelerate payments to increase cash flow to provide better management of the costs incurred in the manual steps taken to receive payment in the B2B space.

Our cloud-based solution automates accounts receivable from bill presentment, to follow up, collection and reconciliation.

HOW IT WORKS

CREATE

Create an invoice in your accounting software just like you always have, and let The Genie do the rest.

SEND

Invoices go out when you choose on your letterhead automatically.

REMIND

Late payment & follow-up reminders are sent on your schedule automatically.

COLLECT

Both subscribers & their customers can log-in, make payments, view history, set-up auto pay, from anywhere 24/7.

RECONCILE

Integration saves you time by eliminating duplicate work and making reconciliation easy.

Results:

40% reduction in overdue invoices.

15 DAYS faster on payments received.

10-20 hours saved per week of administrative work.

Because of our frictionless platform, it is possible to offer solutions to buyers and suppliers together, helping incentivize buyers to pay sooner and helping suppliers receive money in a digitally automated way, while removing many historical — yet ongoing — delays, like the need to manually match invoices and purchase orders.

Today’s B2B payments platform means providing flexibility for how buyers want to make payments to allow for a flawless digital process that removes the manual steps to speed up cash flow, accelerate payments and lower the cost of processing digital payments.