Demand for efficiency will drive embedded finance in 2023
CFOs are adopting embedded B2B solutions faster as 2022’s digital transformation drives 2023’s data-driven growth.
According to research in the most recent report, “The AR Transformation Solution: Easing And Accelerating Payments From Business Customers,” businesses that strategically transform and modernize their accounts payable (AP) and accounts receivable (AR) operations with streamlined and integrated innovations are more likely to succeed in managing working capital, forecasting cash flows, and operating cash flow.
Plug-and-play, one-stop embedded financial solutions for B2B payments may be the star player in this efficiency game.
These technological advancements not only assist companies in driving operational certainty and increased profitability, but they may also be able to deliver the enhanced transparency and real-time information that finance leaders and decision-makers long for, particularly during hard times.
Increasing Growth
AR fuels business expansion, but payment hiccups and barriers, such as inadequate vendor AP integration, can stall or even halt this expansion before it gets going.
Businesses increasingly prefer to pay suppliers and other companies through digital channels. However, integrating next-generation AR solutions with clients’ AP systems can be challenging, mainly if those AP procedures still rely on antiquated manual methods.
Setting up the proper B2B payments network may assist in easing onerous administrative costs and reduce technological complexity on both sides of the transaction. Scalable payment networks that use cutting-edge AR technology may speed up transactions, give consumers better terms and timelines, and give customers more payment options.
According to research, approximately half of all B2B bills will be generated, handled, and paid automatically for the next three years.
The emergence and uptake of one-stop B2B payment networks will enable excellent connectivity between order-to-cash functionality and overall payment ecosystems as more businesses modernize their AP and AR systems, aiding organizations in managing cash flows and improving growth while lowering administrative burdens.
Justin McMahan, CFO of Abra, says, “We’re extremely focused on finding solutions from the front end all the way to the back end that link into each other.” Regarding systems, “we’re striving to be as unsiloed as possible.”
Resolving B2B Frictions
A technological gap or an expectation difference between customers and providers causes payment friction.
Fortunately, embedded financial tools can aid in closing these gaps.
According to a recent study, “The AP/AR Quick-Start Guide,” while buyers frequently prefer to pay their suppliers via a regular automated clearing house (ACH) or cheque payments, their suppliers prefer receiving payments via procedures that provide them quick access to cash, such real-time payments.
Organizations may develop a B2B payment network to address this issue and lessen dependency on various payment methods by offering a more comfortable digital payment experience driven by integrated finance. Utilizing a single transaction system satisfies the requirements of both the buyer and the seller.
According to a study, more than eight out of ten firms (85%) have lately boosted their usage or acceptance of digital payments.
Payments are sent more often, effectively, and as planned, the more digitally automated and centralized a company’s B2B procedures are. The more pleased suppliers and vendors are, the more probable it is for corporate executives to say they are content with their accounts payable platforms.
Results from AR Transformations
Spreadsheets, manual procedures, and outdated workarounds make it difficult for businesses to expand and extend their operations, providing rivals and colleagues with an advantage.
By accelerating order-to-cash processes, utilizing automation to support high-level invoice reconciliation accuracy, centralizing AR management processes to ensure quicker payments, and promoting ERP integration that transforms rich AR data into actionable insights, integrated AR solutions can deliver immediate B2B payment wins.
Business objectives on both sides of the transaction will change, as will expectations and demands for B2B transactions, as firms themselves expand and digital marketplace trends improve.
By creating a best-of-all-worlds payment experience that optimizes working capital and cash flow visibility and streamlines operations, next-generation B2B payment networks may help organizations create a competitive moat.
