Future of Business Commerce: Why Payment Information is as Important as the Payment
Companies are in continuous pursuit to reduce complexities, gain efficiencies and drive growth. One area of business that offers huge opportunities is accounts payable. More than 50% of B2B payments in the U.S. are made by check. In a consumer world, where PayPal and Apple Pay offer speed and convenience, checks are an outdated method for payments. Accounts payable processes are often paper-based too. Capturing the information requires time-intensive data entry, which can be prone to errors.
It doesn’t have to be this way.
To learn what’s on the horizon for modernizing accounts payable, I spoke with Drew Hofler, who directs collaborative finance solutions marketing at Ariba. Drew will lead a series of discussions at Ariba LIVE, which takes place April 7 to 9 in Las Vegas and 8 to 10 June in Munich.
Q. In your view, what is the future of business commerce?
Business commerce began as face-to-face trading. When commerce activity moved over to the telephone, it started to become siloed. As business operations evolved, functional teams began keeping information around their commerce activities contained within their departments. Purchasing information was often confined within paper-based processes, which restricts the level of visibility that leaders have over commerce activity across their organizations. Essentially, big buckets of companies’ commerce data became trapped within disconnected processes and paper.
But companies no longer need to live in this reality. Business networks connect processes, people and business partners, delivering visibility and collaboration at scale. These networks break down unnecessary barriers to enable instant, integrated information that drives collaborative and efficient processes – that’s the future of business commerce.
Q. What are companies misunderstanding about business commerce?
Often times, companies focus on how to improve antiquated payment processes developed in a different era rather than leveraging new tools and resources to develop completely new processes that fulfill their desired outcomes.
B2B payments are complicated because there’s quite a lot of information that has to be associated with the payment to the suppliers. For instance, multiple invoices may be covered within a single payment, and those invoices may have adjustments that change the amount being paid from what is expected. Both the company making the payment and the company receiving the payment need to have accurate information to reconcile. The most commonly used B2B electronic payment method (ACH) limits the amount of information associated with a payment to 80 characters. That’s less than the character limit for a tweet!
Today’s technology gives us the opportunity to rethink the path to achieve the desired outcome.
For B2B payments, one such outcome should be to deliver comprehensive information to suppliers. Instead of trying to shoehorn remittance data into limited payment formats, why not simply attach the payment settlement to the comprehensive data already being exchanged between partners on business networks?
Interested to learn more from Drew? Stay tuned for the second part of our conversation, where Drew examines how Apple Pay may influence B2B payments.
Stay tuned to the latest news and conversations about Ariba LIVE by following the #AribaLIVE hashtag on Twitter.
This blog originally appeared at Ariba Exchange.