The B2B payments community has been discussing the persistence of the paper check — and its supposed inevitable demise — for years. Even amid a pandemic and accelerated corporate digitization efforts, the paper check still gobbles up its fair share of B2B transaction volume. So when looking out on the horizon of the corporate payments landscape, will paper checks remain in its future?
Nobody knows for sure, of course, but as companies continue to drive forward in their modernization efforts, 2021 is already signaling the rise of new dynamics between businesses and their suppliers. There are big implications for the way money moves between the two, said Craig O’Neill, CEO of Versapay — and it’s unlikely that the paper check will be able to continue its cozy existence in those new frameworks.
“Checks have to go away,” he told Karen Webster in a recent interview. “I do think there will be a long tail, because there are always laggards, so it could be as long as 10 years before checks are completely gone.”
It’s the same conclusion drawn in Versapay’s upcoming eBook, “B2B Buyer’s Experience in 2030,” which makes some hard-hitting predictions — not only about the future of the paper check, but also the dramatic shifts ahead for accounts payable (AP) and accounts receivable (AR) teams that will operate in a new age of B2B commerce.
The Rise Of The User Experience
The accelerated digitization efforts of corporates as a result of the global pandemic has, at the very least, “opened the eyes of finance professionals” to the need to change outdated payment flows, O’Neill said. Most notably, the inability for team members to physically enter an office to cut, send and process paper checks has businesses giving the payment tool a second thought — and O’Neill predicts that a hybrid model of workers staying remote will likely be a permanent fixture in the future.
Historically, the reason the check has stuck around has largely been the result of a “don’t fix what isn’t broken” mindset, with many companies actually finding it easier to process paper checks than other electronic payment methods. It’s a recent development in the B2B payments technology landscape that electronic payment solution providers have begun to focus on easing friction not only for the payer, but also for the supplier — a shift that O’Neill said is indicative of a broader focus on the user experience.
“Payments have made the mistake in the past of being focused only on the buyer experience,” he said. “But it’s a two-way street. Buyers and sellers have to interact. They both have to embrace whichever form of payment is going to be used, and the experience of both needs to be taken into account.”
A Collaborative Ecosystem
As more solution providers embrace the opportunity to drive traction for their solutions by solving friction for both buyers and suppliers, the B2B payments landscape is naturally evolving in a direction that can promote collaboration between those two parties. This concept of “collaborative commerce” occurs on two layers, according to O’Neill.
“It’s embracing the idea of systems talking to each other, but also systems facilitating people talking to each other,” he said, adding that this collaborative spirit is an extension of what CRM (customer relationship management) technologies have already done for the organization. Just as those software solutions have driven the ability for internal teams to collaborate with each other, collaborative commerce will enable businesses to work with their partners outside of the enterprise.
Early evidence of this trend has already emerged in the form of digital marketplaces. The future, said O’Neill, will take the marketplace model one step further, giving rise to a “network of marketplaces” or a “network of networks” that elevate the transparency of participants, drive communication between partners and enable the integration of systems between those collaborators.
Payments Smarten Up
At the heart of many of these emerging trends is the concept of connecting and moving data from one business to another. It’s vital not only to facilitate commerce, but also to facilitate the exchange of money between firms, but when back-end systems like AP and AR are so tightly interconnected, payments technology must be able to support the same movement of data that those platforms can.
“That’s where the marketplaces will ultimately go — but it takes standards, it takes really good integration, it takes security and it takes one really important thing: smarter payments,” said O’Neill.
Among the biggest shortcomings of today’s payments infrastructure is its inability to move transaction data alongside a payment instruction, creating plenty of room for manual work and errors in the reconciliation and cash application process. And while B2B payments have historically followed the paths previously forged by B2C trends, corporate transactions are immensely complex, requiring a significant amount of customization and flexibility to facilitate instances of discounts, payment terms and programs — all while managing a significant gap between when a purchase is made, and when a transfer of money actually occurs.
As business models evolve toward subscription- and consumption-based paradigms, the need for smarter payments will only increase. There is a lot of ground for B2B payments technology to cover over the coming years — but, as O’Neill expressed, progress is on its way. “It will be a crawl-walk-run,” he said. “And I think some of the crawling is happening now.”