New B2B Tech Reshapes Buyer-Supplier Dynamics While Unlocking Working Capital

Need a penny, take a penny has never quite flown in the B2B world.

Now, contemporary buyer-supplier dynamics are being continually reshaped against the backdrop of today’s hostile operating environment.

In addition to yearslong inflation and rising interest rates, organizations find themselves facing changing demand, tighter supply and ongoing supply chain challenges aggravated by black swan geopolitical events.

All of these have led to a heightened level of tension brewing across the B2B ecosystem, with firms on either side of the transaction prioritizing their own working capital needs and protecting their liquidity management strategies.

New digital solutions, from automated order-to-cash and source-to-pay processes to flexible and innovative credit and financing tools, are helping to remove legacy bottlenecks along the B2B journey. At the same time, they give both buyers and suppliers what they want, helping remove the temptation for firms to push the envelope when it comes to payment terms or collections.

As for what it is that today’s businesses actually want?

From a money-in, money-out perspective firms are looking to get paid in the shortest time possible, while at the same time paying their own suppliers on the longest horizon possible, all while being able to meet demand without locking up too much working capital.

In a macro climate where liquidity is drying up and rates are rising, it all may seem like a tall ask.

Cash Flow Flexibility Starts With the Finance Seat

While the digitization of the B2B space has provided new value-adds that can help firms optimize and enhance incumbent and emergent buyer-seller relationships with flexible payment and financing solutions, there is still no replacement for a savvy finance team and an agile chief financial officer.

“Whether you are on the buyer side or supplier side, the CFO’s job is to manage cash flow — making sure we are accelerating inflows and not paying anything before we absolutely have to pay it,” Bob Purcell, CFO of Billtrust, told PYMNTS CEO Karen Webster in May.

“It really comes down to leverage,” he added.

Optimal management of days payable outstanding (DPO) and days sales outstanding (DSO) can either make or break a business trying to succeed in today’s landscape.

Leveraging Tech to Manage Working Capital Can Add Back to Bottom Lines

The digital age is transforming the way buyers and suppliers interact, and technology is at the forefront of this change.

Navigating the challenges of the present business landscape will require a winning combination of people, processes and technology, particularly as speed to revenue and speed to cash flow are increasingly put under new and accelerated pressures across all industries and businesses.

Automated digital solutions can help provide today’s buyers with multiple ways of paying how and when they want, while letting the technology drive the optionality with less manual effort, empowering organizations to build stronger relationships and drive better business outcomes.

After all, electronic payments not only make reconciliation easier for both sides of the transaction, but they also eliminate the uncertainty of “when will I get paid” inherent to waiting for a physical check in the mail, or refreshing an account to see whether one has been cashed yet, Ernest Rolfson, CEO and founder of Finexio, told PYMNTS this month.

Still, Rolfson emphasized: “Checks are going to continue to die the slowest death.”

See also: The Trickledown Consumerization of B2B Payments Helps Firms Win Business

And while that may be true, those businesses continuing to mail invoices and rely primarily on paper checks may find their own business and vendor relationships dying a similarly slow death as B2B partners move elsewhere to firms with simpler, more seamless processes that can give them the speed to cash they want.

Accounts payable (AP) and accounts receivable (AR) automation software can simplify invoice processing and follow-up. Automation removes such manual processes and gives back time to employees to focus on more value-add tasks. AP automation can also cut the cost of invoice processing by reducing the amount of data entry involved and eliminating document storage, postage and invoice production costs.

As the CFO role continues to transform, with finance leaders leaning into the business more strategically, leaders must focus on customer retention and avoid creating unnecessary friction within key relationships.

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