What has become the norm for consumers with virtual cards, mobile payments, and online banking has been filtering through to the business world. But frustration continues to mount, because while there has been some acceleration, the adoption of virtual B2B payments by most companies is still painfully slow.
It can seem daunting for finance teams to consider implementing a modern spend management system to replace their current one, but making the leap to digitize your business is quickly becoming a necessity.
The implementation of a virtual payment system enables finance teams to streamline their entire payment processes, generate invaluable real-time data, and help to make informed, robust decisions. Given that business is still playing catchup, some CFOs and finance teams either remain unaware of how smart payment system digitalization can benefit them or hesitate to move away from the status quo.
This needs to change. Business leaders who make the transition see how the use of real-time payment methods can revolutionize their firms. Reporting portals and advanced analytics enhance employee engagement.. Reconciliation features improve payment acceptance rates. Security protection and fraud prevention is strengthened throughout the organization, while integrations with ERP and other financial systems ensure a smooth process.
But digitalization is not just about reaping the benefits of an up-to-date and future-proof system. As more companies take on a digital strategy, suppliers and partners will prefer to work with those employing digitally advanced systems rather than those who cling to outdated methods.
The Pandemic Effect
If the global pandemic has taught us anything about business, it’s that moving money faster and easier is key to sustaining business practices and driving the repair of broken economies. This realization is already delivering a further boost to the consumerization of B2B payments, and the more that this takes hold, those companies without a digital process in place will feel increasingly left behind.
Remote working has only encouraged the digitalization and development of best practices in other areas of spend. Corporates are increasingly demanding payment through the use of technology with, for example, increased use of virtual cards accessed through cell phones or cloud-based payments, helping to enable a frictionless and seamless approval process.
Hospitality is one industry that has had to move fast to adapt. Restaurants are now serving both consumers and businesses and are increasingly providing more pay-at-table options. Pre-ordering is often available only online or via mobile for pickup and delivery, with payment options swiftly moving in the same direction. This is just one example of how industries are adjusting; organizations with employees who need to interact across different sectors must equally adjust to keep up too.
The Green Effect
The physical card still has its part to play in the B2B payment process and will remain important for some time to come. A recent study noted that U.S. business card spend is expected to rise 10% annually to $763bn by 2022, although this still only accounts for approximately 3% of total B2B payments in the U.S. However, many firms are increasingly prioritizing sustainability and setting targets to reduce plastic, meaning the desire to use virtual cards to support the consumerization of B2B payments will only rise.
Taking plastic out of the system forms part of the next generation of spend trends and, with it, the market for virtual payments will sharply multiply. According to Forrester Research, 44% of B2B buyers will be millennials by 2025—a demographic group considered to be far more interested than others in sustainability.
Besides saving the planet, virtual cards are key to helping finance teams control expenditure more effectively with real-time approvals and pre-approvals, while adhering to a robust green agenda.
It’s Time for a Mindset Shift
There’s no reason why business payment transactions can’t ultimately be managed in the same way as consumer payments, so CFOs need to get on board with digitizing their organization’s business processes.
They should not be concerned with giving up control over expenditure or security issues. Once integrated, a secure cloud-based B2B payments system, such as TripActions Liquid, can operate your payment structure and seamlessly integrate with all other payment flows, providing an overarching view of the business with increased transparency.
The implementation of digital B2B payment systems is starting to materialize on a wider scale, with virtual cards as a key component. And as business leaders increasingly realize that major financial, process, and sustainability benefits exist when updating systems, the consumerization of B2B payments will only accelerate.