64% of SMBs Face Delayed Payments

Accounts payable (AP) remains a pain point for businesses of all sizes, particularly those that still rely on legacy methods like checks. The adoption of embedded payments presents an opportunity to transform AP, enhancing efficiency and security while addressing ongoing challenges.

A PYMNTS Intelligence report, “Embedding Transformation: Solving Critical AP Challenges With Embedded Payments,” done in collaboration with Finexio, underscores the need for businesses to rethink their payment processes and consider modern solutions that integrate seamlessly into their existing systems.

The Challenges of Traditional B2B Payments

Business-to-business (B2B) payments are essential to the economy, yet they often lag behind peer-to-peer (P2P) and consumer-to-business (C2B) models in terms of usability and security. Sixty-four percent of companies face delayed payments, with suppliers typically waiting an average of 43 days to receive funds. This delay results in 80% of potential discounts going unclaimed, highlighting inefficiencies that can significantly impact cash flow and supplier relationships.

Meanwhile, fraud remains a pressing concern. About 60% of companies reported experiencing B2B payment fraud last year, with 12% facing more than 10 attempts. The financial repercussions are staggering, as 24% of businesses lost more than $100,000 due to such fraud, with 5% suffering losses exceeding $1 million. Legacy payment methods like checks and wire transfers are particularly vulnerable, underscoring the urgent need for more secure and efficient alternatives.

The Promise of Embedded Finance

Embedded finance offers a compelling solution to the myriad challenges facing AP teams by integrating financial tools directly into existing software. This eliminates the need for external banks or payment processors, streamlining transactions and enhancing security. The projected volume of embedded finance solutions is expected to soar to $7 trillion by 2026 (from $2.6 trillion in 2021), illustrating the growing recognition of its value.

According to the report, suppliers prefer payment methods that expedite fund transfers such as virtual cards, driving the adoption of embedded finance. Notably, integrated solutions enable AP departments to enhance efficiency through automation, improving invoice reconciliation accuracy and accelerating the order-to-cash process. By centralizing management processes, businesses can resolve payments more quickly, creating better supplier relationships and cash flow management.

Real-World Success Stories

The benefits of embedded payments are evident in real-world partnerships. For example, Mastercard’s collaboration with KredX has streamlined B2B transactions by integrating commercial card services with a platform for dynamic discounting and early payments, tackling issues like lengthy accounting processes and low vendor acceptance rates.

Similarly, Proactis and Finexio’s partnership exemplifies the impact of embedded payments in automating AP processes for midmarket organizations. By integrating various payment types—including automated clearing house (ACH) and virtual cards—this collaboration aims to eliminate manual processing, enhance fraud detection, and provide durable security measures for sensitive financial data.

As businesses navigate a complex financial landscape, embedded finance solutions enhance accounts payable by integrating payments directly into existing systems. This integration reduces manual data entry, minimizes errors and alleviates administrative burdens while lowering costs associated with paper processes and late payments. These solutions also enhance security against fraud and data breaches. By adopting embedded payments, companies can modernize their financial transactions, allowing them to focus on core activities and build a more efficient, secure financial ecosystem.