Finserv Finds Multiple Avenues To Connect AR And AP

B2B FinTechs and financial service providers are taking a variety of routes to optimizing both accounts payable (AP) and accounts receivable (AR) operations with a single solution.

For some providers, technology that sits between buyers and suppliers supports financing for suppliers while enabling buyers to hold onto working capital. Others embrace payments automation to reduce administrative burdens on both ends. Below, PYMNTS looks at the latest tools that bridge the gap between AR and AP.

Mastercard Optimizes Capital For Buyers, Suppliers

Mastercard debuted its Mastercard Track Business Payment Service this week, a B2B payments service designed to address friction for both buyers and suppliers.

To optimize working capital, suppliers can have greater control over how they receive payment from different buyers, while buyers can obtain early payment discounts and manage cash flow. The solution will first support Mastercard’s card rails, with added support for ACH later on.

In a statement, Mastercard’s James Anderson, executive vice president of Global Commercial Products, said it’s important for B2B payments technologies to address both AR and AP friction.

“We realized that we needed to apply the techniques that work so well in consumer payments: delivering value to both buyers and suppliers, embracing standardization, driving scale by working with the most capable partners and by creating incentives to drive behavioral changes by the participants,” he said in a statement.

Process Mining Tackles AR-AP Friction

As sophisticated data analytics technologies move deeper into AP and AR workflows, process mining is exploring the opportunity to address friction in both.

In a recent conversation with PYMNTS, Celonis Vice President of Business Models and Enablement Jan Philipp Thomsen discussed the opportunity for process mining to not only identify workflow bottlenecks in AR and AP processes, but to automatically identify how to solve them.

This is particularly important for ensuring cash continues to flow both in and out of the enterprise between business partners.

“Accounts payable and accounts receivable are the most in-demand areas within finance that we’re looking at,” said Thomsen. “They’re clear levers for bolstering liquidity, which is very important right now amid COVID-19. Companies were trying to stay competitive [before the pandemic]. Now, they’re trying to stay afloat. So, the ability to pivot from one goal to another is key to being resilient.”

Azzurro Associates Steps Into Invoice Finance

In the U.K., finance solutions provider Azzurro Associates is stepping into the B2B space for the first time to finance unpaid invoices, according to a press release. The company announced an effort to bolster at least £1 billion (about $1.22 billion) to finance unpaid receivables, a financing offering that could help B2B suppliers on the AR side to access much needed capital, while enabling B2B buyers on the AP side to continue strategically extending payment terms.

In an effort to help businesses struggling to manage capital as a result of the pandemic, Azzurro Associates said it is differentiating itself from other factoring companies by offering to finance overdue and written-off invoices, not only outstanding invoices.

Traydstream Collaborates On Trade Finance

Also positioning itself to bolster trade finance offerings is Traydstream, which recently announced a partnership with Infosys Finacle.

Their collaboration will see Traydstream adopt Infosys Finacle’s blockchain technology to enhance trade finance automation via Finacle TradeConnect. The technology automates ownership validation, document certification and payment processing to streamline trade finance workflows, allowing buyers and suppliers to each optimize working capital without putting a financial strain on their business partners.

linked2pay Empowers The AR Department

One of the biggest challenges of addressing both AR and AP friction is that the needs of buyer and supplier are often conflicting. Payments timing is one of the tallest hurdles. While suppliers need to be paid as quickly as possible, buyers want to delay payment to hold onto their own working capital.

This conundrum has introduced new opportunities for third-party trade financing solutions, but a new solution from linked2pay offers another opportunity to empower the AR department to get paid in a timely manner, while also benefiting clients’ AP operations. The company recently announced its CustomerConnect solution, which enables vendors to onboard customers and their payment information, and automatically initiate payment on an agreed-upon due date.

In an interview with PYMNTS, linked2pay CEO Robert “Jay” McShirley admitted that this may not immediately be welcomed by corporate buyers. But the technology can promote a culture shift in the B2B payments world, while also reducing the administrative burden of buyers to initiate and manage payments.