Traditionally, business-to-business (B2B) payments required businesses to manually send invoices, gather approvals, and process cheques. Automation can handle these processes faster, cheaper, and more accurately and initiate electronic payments instead of processing physical cheques. Because businesses can track invoices and payments in real time, they can make better informed financial decisions. Automation is increasing transparency and control in the global B2B payments market, which was valued at $79.5 trillion in 2023.

Below is a guide to automating B2B payments, including benefits, challenges, and how to integrate payment automation tools into your business.

What’s in this article?

• Benefits of B2B payment automation
  
• Types of B2B payment automation solutions
  
• How to integrate payment automation into financial systems
  
• How to solve B2B payment automation challenges
  

Benefits of B2B payment automation

Automated B2B payment systems are faster, less prone to errors, and more transparent than manual processes. Businesses using automation can pay people on time, reduce time spent correcting manual errors, and make better informed financial decisions.

Here’s an overview of the benefits of automated systems:

• Time savings: Free your team from processing invoices and payments so they can focus on key initiatives that drive growth.

• Lower costs: Increase profits by saving money on labour, postage, and late payment fees.

• Improved accuracy: Reduce errors in invoices, payments, and records, especially when handling large volumes of data.

• Increased efficiency: Fine-tune the payment process from invoice creation to reconciliation, creating faster payment cycles and improving cash flow.

• More financial visibility: Track financial health – including invoices, payments, and cash flow – in real time.

• Stronger security: Protect your sensitive financial data from unauthorised access and cyberthreats, using encryption and fraud detection.

• Scalability: Handle increased transaction volumes without additional labour.

• Better vendor experience: Improve vendor relationships through faster payments and accurate invoices. This can result in better terms, discounts, and priority service.

Types of B2B payment automation solutions

Here’s an overview of automation solutions available in the market:

• Electronic invoicing and processing systems: These platforms automatically create, send, and receive invoices. They can often match invoices to purchase orders to confirm payments are accurate and correspond to the delivered goods or services. This reduces manual data entry and its associated errors.

• Automated Clearing House (ACH) payments: US businesses sometimes prefer ACH payments for electronic funds transfers (EFTs) over traditional wire transfers because of their low cost. Automated ACH transactions can process regular and bulk payments, making them ideal for payroll, supplier payments, and other large-volume transactions.

• Blockchain-based payments: Emerging blockchain technologies are a newer option for automating B2B payments. Blockchain solutions can reduce fraud, lower transaction fees, and provide real-time transaction records that are immutable and traceable.

• Payment gateways and processors: Payment gateways facilitate the secure transfer of funds between businesses over the internet. Many gateways process a variety of payment methods including ACH, electronic (wire) transfers, and credit cards.

• Cross-border payment tools: Cross-border payment tools automate currency conversion and compliance with international financial regulations for businesses with international suppliers or customers. These tools help manage complexities of foreign transactions, including differing tax laws and exchange rates.

• Enterprise resource planning (ERP) systems: ERP systems integrate various operations – such as inventory management and accounting – into a unified system. ERP systems that include payment automation can handle invoicing, payment processing, and financial reporting and forecasting.

How to integrate payment automation into financial systems

Integrating payment automation into your financial systems requires analysing your infrastructure, selecting the right tools, and carefully implementing the new technology. Here are best practices to make the integration process easier:

• Assessing systems: Conduct a thorough audit of your financial systems, including your ERP, accounting software, and any other relevant applications. Consider areas in which automation can add the most value: challenges, inefficiencies, payment volumes, transaction types, currencies, and compliance requirements. This assessment will help you define your automation goals and select the most suitable tool.

• Selecting a solution: The market offers a wide range of B2B payment automation solutions, each with varying capabilities and features. Find a solution that aligns with your needs and long-term goals, considering factors such as scalability, flexibility, security, integration capabilities, and vendor reputation. Test product demos, check references, and perform security audits to ensure the chosen solution meets your standards.

• Planning the integration: Once you’ve selected a solution, develop a detailed integration plan. Map data fields between your systems and the automation platform, configure workflows and approval processes, and establish error handling procedures. If necessary, work with a systems integrator or the tool provider’s professional services team.

• Phased implementation: Consider a phased implementation to reduce disruption and allow for adjustments. Start with a pilot project, focusing on a specific payment type or a subset of suppliers. Then conduct tests for data accuracy, workflow integrity, and error handling. Gather feedback from users and stakeholders, and address any issues before expanding the rollout.

• Change management: Communicate the benefits of automation to your team, train employees on the new system, and address any concerns. Ensure your team understands the system’s workflows, functionalities, and reporting capabilities. Provide ongoing support and training to maximise adoption.

• Continual monitoring and optimisation: Track key performance indicators (KPIs) such as processing time, error rates, and cost savings. Regularly review your automated systems, gather feedback from users, and adjust as needed.

How to solve B2B payment automation challenges

Here are some common challenges associated with B2B payment automation and their solutions:

Integration

Integrating a new automation tool with systems such as ERP and accounting software can be difficult and time-consuming. Data inconsistencies, incompatible formats, and a lack of standardised application programming interfaces (APIs) can create integration bottlenecks.

Solutions

• Conduct an assessment of your systems to identify compatibility issues.

• Choose a solution with strong integration capabilities and a proven record of successful implementations.

• Seek the technical expertise of experienced implementation partners to guide you through the process.

Change management

Resistance to change can occur with any new technology. Employees can be hesitant to adopt new workflows and might fear automation will replace their jobs.

Solutions

• Communicate the benefits of automation clearly and consistently to all stakeholders.

• Train employees on the new system.

• Celebrate early successes and emphasise the positive impact of automation, from individual roles to the whole organisation.

Data security and fraud prevention

As digital payments increase in popularity, the risk of cyberattacks and fraud increases. Businesses must protect sensitive financial data.

Solutions

• Choose a solution with strong security features such as encryption, tokenisation, and multifactor authentication (MFA).

• Implement strict access controls, and regularly review security protocols.

• Stay informed about the latest cybersecurity threats and best practices to proactively mitigate risks.

Cost

Initial investment in software, implementation, and training for automation can be substantial. Businesses must demonstrate a return on investment (ROI) to secure buy-in from stakeholders.

Solutions

• Develop a comprehensive business case that explains the cost savings, efficiency gains, and revenue growth opportunities expected of automation.

• Track key metrics such as processing time, error rates, and labour costs to demonstrate the ROI of automation.

Compliance

B2B payments must comply with various regulations including Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements. Doing so while implementing automation can be challenging.

Solutions

• Choose a solution that meets regulatory requirements and includes audit trails and reporting capabilities.

• Stay informed about any changes in regulations, and update your processes accordingly.

• Consider working with compliance experts on your automated payment processes.