What is On-Time B2B Payment?
On-time B2B payment is exactly what it sounds like – paying suppliers on the contractually-defined due date, otherwise known as the invoice maturity date. While the concept of on-time payment is simple enough to understand, this is proven to be one of the most challenging aspects of corporate payments.
Paying suppliers on time remains a critical concern for buyers and suppliers of all sizes – largely due to outdated payment processes and technologies embedded across the global supply chain. In response, many companies are consolidating their supplier base onto a single global payments platform that supports both maturing and early payment for all suppliers.
Why are B2B payments (including on-time payments) so challenging?
Buyers and suppliers encounter several challenges when it comes to B2B payments, starting with cost. Studies show the average cost to process a single invoice can be up to USD$15. Buyers often lack consistent, standardized supplier payment terms and processes that apply to their entire base of suppliers – making it difficult to manage, track and forecast payments and KPIs such as cash flow, DPO, DSO and CCC. Often, buyers have to deploy multiple solutions to support different payment programs (e.g. maturing payments, supply chain finance, dynamic discounting, etc.). Lack of support for multiple currencies also makes it impossible for buyers with truly global supply chains to streamline supplier payments.
Additionally, the administrative burden that comes with managing multiple ERP systems or payment platforms is high. It’s largely a manual process (e.g. updating supplier bank account information), which creates room for payment errors and discrepancies that negatively impact both the buyer and supplier.
There are regulatory concerns as well. A PrimeRevenue survey of suppliers found 49 percent of respondents cited late payments as their most pressing payments challenge. Because of the prevalence of this issue, late payments are driving new regulations and directives in different jurisdictions, particularly in Europe and Australia. As such, buyers need a solution that automatically accommodates regional payment regulations.
Lastly, poor visibility into payment status continues to plague suppliers. A PrimeRevenue survey found that 60 percent of suppliers claimed they had to contact their customers between 1 to 10 times a month to inquire about payment status (more than 10 percent stated they had to reach out more than 10 times a month). This has a negative impact on their ability to manage cash flow and forecast growth.
What is a comprehensive B2B payments solution and what are the benefits?
With increasingly global and dynamic supply chains, companies have a clear need for innovative payment solutions. A comprehensive B2B payments solution is a single platform that supports both maturing and early payments to a business’ entire supplier base.
- Flexibility: By streamlining early and maturing B2B payments through a single solution, buyers and suppliers can easily ensure on-time payment for every invoice or leverage early payment to improve cash flow depending on their unique requirements.
- Payment visibility: Suppliers gain full transparency into invoice approval status and reporting.
- Reduced AP/AR burden: Payment data from all ERP systems funnels up into a single platform to streamline AP/AR processes, reduce administrative burden, and minimize payment processing errors and delays.
- Full supply chain coverage: A comprehensive B2B payments platform supports all suppliers – big and small – across the entire supply chain as well as different jurisdictions and currencies.
- Support for all payment programs: With a single solution, companies can manage and offer early payment programs such as supply chain finance, dynamic discounting, and accounts receivable finance in addition to on-time payment.
- Reduced technical debt and improved payment efficiency: With no need to access multiple ERP/payment systems, companies can reduce the cost of B2B payments and improve process efficiency.
- Support for ESG initiatives: There is no better way to support corporate social responsibility than to ensure every supplier – no matter the size, jurisdiction, or currency – has access to timely payment and visibility into payment.
How does a single platform for maturing and early payment work?
Using a comprehensive B2B payments solution, buyers and suppliers can streamline payment processes, improve payment visibility for suppliers, and operationalize all maturing and on-time payment programs from a single system. The solution issues payment instructions at either invoice maturity or earlier if designated for accelerated payment.
From a supplier’s perspective, a single solution makes it easier – not harder – to get paid. All required documentation (including KYC information) is submitted directly through an online portal. Suppliers are often able to register and submit/advance payment on invoices in as little as 24 hours (or minutes, depending on the size of the supplier and spend).
Suppliers can get paid in less than