In the world of B2B payments, it’s no secret that treasury departments face a variety of challenges when it comes to AP (accounts payable) and AR (accounts receivable) processes. As the final edition of our 4-part series about B2B Payments, this installment focusses on various payment challenges that could be hindering your organization’s efficiency and success.

Treasury’s Top Payment Challenges

When it comes to treasury departments, there are two challenges that payment professionals are most concerned with: payments fraud and manual processes.

Security has been a top priority for treasury departments for several years as fraudsters continue to develop innovative ways to victimize organizations. With fraudulent activity threatening to result in significant corporate losses, this year’s B2B Payments Survey Report by Strategic Treasurers found that 60% of corporates have higher security concerns than they did the previous year.

After payments fraud, treasury departments found manual processes for payment generation to be the second biggest challenge. This data points to the increasing need for automation of treasury-related activities in order to reduce the time, cost, and errors associated with antiquated manual processes.

AP’s Top Payment Challenges

AP departments have notoriously been mired down by complicated and time-consuming processes. In fact, 55% of corporates indicate that managing and updating vendor bank account details is a primary obstacle. This is an exceptionally difficult challenge for large organizations to overcome, as they tend to have extremely complex and distributed networks of vendors to manage.

However, companies of all sizes often lack technologies or processes to validate that the bank account information provided by their vendors is accurate, thus making their organizations significantly more vulnerable to accounts payable fraud.

Looking beyond vendor bank account information, 51% of AP professionals indicated that the timely approval of invoices and payment details proved to be a substantial hurdle. Challenges with invoicing are often a result of organizations lacking technologies that offer a variety of AP opportunities and allow them to streamline their invoice-to-pay process, avoid late payment fees, and take advantage of discounts.

Receivables vs. Payables

While company size and AP and AR prioritization may seem unrelated, data now shows that there is a significant correlation between the size of a company and whether the Order-to-Pay (O2P) or Order-to-Collect (O2C) cycles are a heavy focus. This year’s survey revealed that smaller organizations are 2x more likely to prioritize AR initiatives compared to larger companies. Conversely, large companies are 1.5x more likely to focus on payables than their smaller peers. This data shows that smaller organizations are focusing on AR processes in order to optimize cash flow management, whereas large companies are looking for ways to capitalize on incentives for early payments throughout the AP process.

Most Inefficient Workflows

When asked to list the top three most inefficient components of financial operations, corporates ranked cash flow forecasting at the top of the list, followed by invoice processing and payment receipt/reconciliation. With reports coming from a variety of different channels including email, file transmission, excel, or back-office connections, it can be difficult for organizations to aggregate and standardize this information for forecasts.

With the three most strenuous workflows all concerned with inefficiencies in payment communication and manual processes, corporates are now looking to fintechs to help provide solutions that make payments faster and more conversational.

To find out how your organization’s B2B payments challenges can be solved, download the full 2019 B2B Payments Survey Report.

And for even more insights into the payments industry and beyond, subscribe now and stay up-to-date on the latest trends and topics.

Follow these links to see the other posts in this series:
Payment Industry Trends, Part 1
Game Changing Technology, Part 2
How Emerging Payments Are Gaining Speed, Part 3

Posted by Sam Sweet

Sam Sweet is a featured SmartPayments contributor who brings a global perspective to his writing. He is currently studying communications at Denison University and interning at a fast-paced, multi-faceted marketing department at a leading fintech organization specializing in global payments, banking solutions and fraud prevention platforms.