Exclusive Interview: B2B Payments Aren’t Boring Anymore: Here Are 8 Reasons Why

We’re approaching the mid-point of the decade — and it’s much more than an interesting calendar event. We’ve seen a complete transformation of payments over the past five years, from the pandemic in 2020 and its digital shift to the current focus on security, account-to-account payments, open banking and aggressive tactics from government regulators worldwide.

There was a time when B2B payments would have been absent from any conversation about innovation. But that time is over. Once considered a mundane aspect of corporate finance, B2B payments have become one of the most dynamic sectors in the financial industry. The consumerization of business payments is moving beyond basic mobile apps and real-time data and now includes more sophisticated strategies that mirror successful consumer payment models.

This shift is driven by the need to apply proven consumer payment strategies, business models, and emerging technologies to the complex B2B environment. The change isn’t just cosmetic; it requires a fundamental rethinking of how businesses, from CFOs and treasurers to the various players supporting them, approach financial transactions. It was one of the topics we discussed with PYMNTS CEO Karen Webster as we cut the virtual ribbon on our month-long event “Outlook 2030: How Platforms and Networks Will Power the Future of Business Payments.” Webster identified eight issues and trends to focus on as the event kicked off.

One: Reimagining B2B Transactions

The first issue Webster focused on in our conversation concerned the efficiency of consumer marketplaces like Etsy and Amazon that are now being replicated in the B2B sphere. These platforms, she said, are revolutionizing how buyers and suppliers interact, moving beyond simple discovery to facilitating end-to-end business transactions online. This trend, accelerated by the necessity of remote operations during the pandemic, has evolved into a new operational standard embraced across industries.

Webster cautioned that the complexity of B2B platforms shouldn’t be underestimated. They require careful consideration of pricing strategies, incentives for both buyers and suppliers and methods to ignite engagement. The opportunity lies in leveraging these platforms not just for commerce but as strategic enablers of financial interactions, offering new ways to monetize relationships and add sticky value through integrated payment solutions.

Two: Payments as a Strategy: Beyond Transactional Utility

The strategic potential of payments in B2B contexts is increasingly recognized, as Webster sees it. Forward-thinking companies are exploring ways to transform payments from mere transactional utilities into strategic underpinnings of their business models. This shift involves turning individual payments into accounts that become embedded components of buyer-supplier dynamics. By integrating payments more deeply into business processes, companies can eliminate inefficiencies in buyer-supplier interactions. This integration allows for the creation of value-added accounts that can be monetized, fostering incentives for all parties to participate in a more interconnected financial ecosystem.

Three: The Rise of Embedded Finance in B2B

Webster is bullish on embedded finance, which is finding novel applications in the B2B world. It’s becoming a crucial element in platforms and marketplaces, with new intermediaries making it a relevant option for B2B transactions. The primary benefit is the elimination of friction in getting paid, which is particularly crucial for small businesses that rely on faster payments as a cash flow engine. Options like Buy Now, Pay Later (BNPL) are being adapted for B2B contexts, unlocking value for small businesses by providing faster access to funds while allowing buyers to extend their payment terms. This balance of needs creates a win-win situation, fostering smoother financial interactions between businesses of different sizes and cashflow capabilities.

Four: Reinventing Cross-Border Payments

Anyone who has tried to make a cross-border payment will recognize the pain points: opacity, slow processing times, and lack of information. However, as Webster pointed out, new models are emerging to address these inefficiencies. Some approaches leverage existing rails to create more efficiency, while others explore new technologies like blockchain and digital tokens to move money more seamlessly. The focus, she said, needs to be on solving key frictions: moving money securely and safely, providing transparency throughout the process, and optimizing the economics of cross-border transactions. As global trade continues to grow, the importance of efficient cross-border payment solutions cannot be overstated, making this area ripe for innovation and disruption.

Five: The Evolving Roles of CFOs and Treasurers

This will be one of the most important themes in the PYMNTS B2B event. The roles of Chief Financial Officers (CFOs) and Treasurers are undergoing significant changes in response to the evolving B2B payments landscape. A recent study conducted by PYMNTS Intelligence in collaboration with Citi revealed some surprising insights into how these roles are perceived within organizations, with 79% of C-level executives believing that CFOs and Treasurers perform the same function, while 47% admit to not fully understanding what Treasurers do.

According to Webster, this misunderstanding has significant implications. Treasurers often find themselves excluded from strategic conversations about product development, business models, and trading partner decisions — areas where their expertise in cash flow, liquidity, and working capital management could provide valuable insights.

The reality is that CFOs and Treasurers play complementary but distinct roles, she pointed out. Treasurers are the stewards of liquidity, risk management, and return on cash. Their involvement in strategic decisions can lead to better outcomes, with 88% of Treasurers reporting that their input results in more efficient use of cash to support strategic business initiatives.

This disconnect highlights the need for a shift in organizational thinking. Treasurers should be viewed not as obstacles but as enablers, Webster said, helping to realize strategic visions while ensuring financial stability. Their unique perspective on cash flow and liquidity is invaluable in an era where financial agility can make or break business opportunities.

Moreover, as businesses increasingly adopt omnichannel strategies and explore direct-to-consumer models, the role of the Treasury becomes even more critical. These shifts in business models create new workflows and financial structures that require expert navigation. For instance, when a company moves from bulk shipments to individual consumer sales, it dramatically alters cash flow patterns and introduces new financial complexities that Treasury is uniquely positioned to manage.

Webster believes the evolving B2B payment landscape demands reevaluating how Treasury is integrated into strategic decision-making processes. As businesses face increasing financial complexity and uncertainty, the expertise of Treasurers in managing liquidity, optimizing working capital, and navigating global financial systems becomes indispensable.

Six: The Impact of Uncertainty on Business Payments

Webster calls uncertainty has emerged as “an invisible tax on business,” with tangible impacts on financial decision-making and performance. Recent research from PYMNTS Intelligence indicates that business performance is the top concern for CFOs, with cash flow forecasting and cost controls being the primary drivers of uncertainty.

The cost of this uncertainty is significant, estimated at about 17% of revenue for businesses operating in highly uncertain environments. This is approximately two and a half times more than companies that have robust processes, analytics, and real-time access to data to mitigate uncertainty.

As Webster pointed out, the impact is clear: 40% of CFOs report that uncertainty has diminished profits. In response, there’s a shift in investment priorities. While analytics have been a focus area, attention is now turning towards automation and process improvement. The goal is to create internal efficiencies that address the root causes of uncertainty, providing CFOs with the tools and insights needed to navigate an increasingly complex business environment.

Seven: Cash Flow and Cash Flow Management: The Heartbeat of Business

Cash flow remains the lifeblood of every business, regardless of size. Recent PYMNTS Intelligence research modeling the efficiency of working capital has revealed interesting insights into CFO and Treasurer priorities. While access to working capital is crucial, what’s truly valued is the ability to access it dynamically and flexibly.

High-performing companies often use working capital for strategic investments that may arise unexpectedly. The ability to quickly tap into working capital can be the difference between seizing growth opportunities and missing out. This highlights the need for working capital solutions that are not just available but also agile and responsive to rapidly changing business needs.

Webster believes the call to action for providers of working capital is clear: develop tools that help businesses grow and allow them to access capital swiftly as conditions change. This agility in financial management is becoming a key differentiator in competitive business environments.

Eight: The Promise and Reality of GenAI in B2B Payments

Generative AI (GenAI) is a hot topic across industries, and B2B payments are no exception. A PYMNTS Intelligence study of how large enterprises are adopting GenAI reveals a spectrum of applications, from low-impact tasks like improving email communications to high-impact, mission-critical functions. Initially, there was significant optimism about the potential of GenAI, with CFOs expressing confidence in its applications and return on investment. However, as implementation progresses, the reality of measuring ROI has proven challenging. Despite this, investment in GenAI continues, driven more by the fear of being left behind than by clear metrics of success.

Webster pointed out that the timeline for GenAI integration is also being reassessed. What was initially seen as a two to three-year journey is now viewed as a decade-long process of integration and refinement. This longer perspective, while seemingly daunting, aligns more realistically with the time frames seen in other major technological adoptions in finance.

The focus now is on collaborative development, she said, with GenAI innovators and large language model providers working to create solutions that address the specific needs of CFOs and the broader business community. While the full potential of GenAI in B2B payments may take time to realize, it’s clear that it will play a significant role in shaping the future of financial operations and decision-making.

Conclusion:  The Stewards of Financial Responsibility

According to Webster, it’s clear that we’re entering an era of unprecedented dynamism and opportunity. The transformation we’re witnessing isn’t just about technology; it’s about reimagining the very foundations of how businesses interact financially. She believes the stewards of this transformation – the solution providers, experts, and financial professionals – are working tirelessly to build trust and foster relationships that drive business growth. They’re not just selling products; they’re partnering with businesses to navigate the complexities of modern finance. The conversations happening around B2B payments are no longer just about moving money, she said, they’re about unlocking strategic value, fostering innovation, and reimagining business models.

As we continue to explore and shape the future of B2B payments, one thing is certain: the days of considering B2B payments as boring are long gone. We’re at the forefront of a financial revolution, and the opportunities for innovation and growth are boundless. The future of B2B payments is not just about transactions; it’s about transformation, and it’s happening right now.

• Register now to access all streaming and on-demand videos from the B2B Payments 2024 event series. 

The post Exclusive Interview: B2B Payments Aren’t Boring Anymore: Here Are 8 Reasons Why appeared first on PYMNTS.com.