Helping CFOs Monetize The B2B Payments Digital Transformation

Although the enterprise continues to accelerate its digitization efforts, chief financial officers keep hitting roadblocks when it comes to modernizing workflows regarding accounts payable (AP) and embracing electronic payments.

Their hesitancy isn’t without reason: CFOs and finance teams can find it a monumental task to overhaul manual systems and processes that have been in place for years — and understanding the first step to B2B payments digitization can be a dizzying task.

On the other hand, once CFOs migrate away from paper checks, some professionals might believe their work is done.

Not so, says Meitra Aycock, senior vice president of operations at Comdata. In a recent conversation with PYMNTS, Aycock emphasized the need for finance chiefs to broaden their view of what it means to truly digitize B2B payments. That means keeping a focus on digital data, as well as on the supplier who is receiving payments, for the greatest chance of success.

Expanding The Scope

It’s no small feat to finally let go of paper checks, but once CFOs have checked off that box on their B2B payments digitization roadmap, there is more work to be done.

“Historically, we’ve talked a lot about making payments electronic,” Aycock said, “but where the distinction comes into play with digitization is that it’s not only about making the payment electronic; it’s also about making it consumable by a computer.”

When it comes to B2B payments, she said, that means ensuring funds can be transmitted electronically, as well as ensuring that data from the transaction can be integrated into back-office systems.

Yet it doesn’t end there.

CFOs and AP teams must also keep their suppliers top of mind, as well as their ability to ingest that transaction data and accept funds to support an automated reconciliation process.

The concept of promoting transaction data integration for both AP and accounts receivable (AR) teams can be a difficult one for finance chiefs to grasp. Even as organizations embrace ACH over paper checks, said Aycock, their vendors struggle to capture that transaction data and automate reconciliation on their end.

“The emphasis has been on making things better from an AP point of view, and not what the benefit is to the supplier within an ecosystem,” she noted.

Monetizing The Virtual Card

When CFOs prioritize data digitization and integration for both their organizations and their suppliers, taking the first step toward B2B payments electronification can come a bit easier.

For many finance chiefs, this consideration may mean a virtual card program is a more effective fit to digitize payments over other methods. As Aycock explained, that’s because organizations need the resources to both adopt ePayments and to ready their back-office systems and workflows to ingest that data.

Through monetizing a virtual card program, firms can have the means to do so.

“In my view, when looking at a digitization strategy, the first question that needs to be answered is, ‘How are we going to fund this?'” she said. “I believe the way you fund a digitization strategy is through the adoption of a virtual card program.”

By embracing opportunities like card rebates and the option for early payment discounts with suppliers, AP can accelerate its shift from a cost center to a revenue generator and cost saver. That’s a valuable position to be in, and one that Aycock said can also support a firm’s ability to collaborate with card issuers and suppliers to augment the value of a virtual card program for both the sender and receiver of payments.

Strengthening B2B Ties

Understanding vendors’ biggest pain points for virtual card acceptance is key to overcoming those barriers to virtual card program implementation. The strategy can enable suppliers to seamlessly ingest transaction data to automate reconciliation while also broadening their opportunity to accelerate their own order-to-cash cycles.

This strategy is becoming even more crucial as buyer-supplier relationships grow more strategic and valuable, a trend that Aycock said has expanded in the wake of the pandemic. Virtual cards can act as a vital bridge between business partners, even as teams work remotely.

“A virtual card, or any digitized connection, between buyer and supplier eliminates a lot of overhead,” she explained, adding that cost savings resulting from no longer having to physically cut or receive paper checks is beneficial for both sides of a B2B transaction.

There will be other opportunities to further strengthen buyer-supplier relationships through virtual cards. Embracing machine learning (ML) and artificial intelligence (AI) can add value to the data generated from virtual card transactions, which elevates decision-making and cuts the costs of manual analysis.

Additional friction points continue to plague both AP and AR operations — even after payments are digitized and data is integrated. According to Aycock, for example, more businesses are expressing frustration that a cross-border transaction is considered an exception in the invoice processing workflow, meaning that payment must be routed to the treasury department for initiation. It’s a friction point that innovators can address by rolling cross-border payments into the AP workflow, while promoting transparency and efficiency for the vendors receiving those global transactions.

As CFOs’ priority lists grow, the opportunity to monetize virtual card programs to fund modernization efforts will also expand.

“We have long had this tagline of, ‘Turn your AP department from a cost center into a revenue center,'” said Aycock. “Those are nice words, but they’re really powerful when embraced … the monetization of payments is something each and every CFO really needs to consider.”