Tech-Savvy CFOs Will Integrate B2B Payments to Accelerate Digitization in 2021

Thomas C. Priore
Chief Executive Officer
Priority Technology Holdings

If 2020 was the year of reaction to the pandemic crisis, 2021 will be the year that CFOs will proactively transform their spend strategy to monetize accounts payable. They are ready to move beyond responding to the “new normal.” They will achieve a “new better” way to go digital by integrating payments across their entire AP spend. And, they can do it without sacrificing mission-critical relationships with their banks and suppliers.

The Current Landscape

The unexpected and rapid shutdown in early 2020 resulted in many organizations adopting patchwork solutions for digitizing payments. Now they find that:

• Workflows, cash flow, and supplier relationships have suffered.
• Highly fragmented, inefficient cash and paper-based payments still prevail, especially for high-ticket payments.

The US Federal Reserve reported that the number of commercial checks collected declined by 13% in the third quarter of 2020 from the year-earlier period. However, the value increased by 4% due to a 20% increase in average check size. Clearly, most card solutions still create a barrier to optimize capital and monetize large purchases.

Analysts anticipate another 10 percentage point decline in the share of checks this year, with a substantial portion of this moving to digital payment solutions that offer working capital benefits. This is expected to create a “digital hockey stick” acceleration in B2B adoption in 2021 not seen since the period between 2015 to 2018, according to Windward Strategy.

A Word of Caution

We offer a word of caution to CFOs and controllers who plan to adopt new or more aggressive digital payment strategies in 2021. Be sure that your solution:

• Truly removes fragmentation between card, ACH, and check payment rails.
• Does no harm to banking and supplier relationships that are foundational to your success.

Tight margins and lean accounting teams mean that middle market companies and other organizations need an elegant platform that achieves their capital management objectives without disrupting their AP workflow, bank engagement, and strategic supplier relationships.

Five Critical Success Factors for 2021

During 2021, it will be important that CFOs, controllers, and others stop defaulting to “just card” and begin to discover how easy and beneficial it has become to integrate all forms of supplier payments. It is now possible to pay all suppliers with a single payment instruction file and receive robust reconciliation reports and monthly rebates automatically.

When partnering with their bank or directly with a fintech to implement a B2B payments platform, CFOs should evaluate five critical success factors:

1. Neutral solution: Also known as “agnostic,” the solution should be able to integrate without conflict with your existing ERP, accounting workflow, banking  relationships, and card processor if you already have one.
2. Strong business case: An AP transaction analytics report will reveal opportunities to free up cash with higher days payable outstanding, reduce your payment processing costs, and generate new revenue.
3. Seamless implementation and supplier value: The solution should use less (not more) of your internal IT and accounting resources. The fintech should also deliver an in-house team of knowledgeable supplier enablement problem-solvers who understand how to establish the intersection of value between buyers and suppliers.
4. Integration of all payment forms: Take a close look at the solution to avoid adopting a patchwork of providers and processes. Engage a partner that owns or is fully accountable for delivering all methods of payment from a single instruction file. (Virtual Card, ACH+, Dynamic Discounting, and Check)
5. A value above and beyond: Lower transaction rates and higher rebates are the starting point. Technology solutions should offer a best-in-class user interface, low-friction supplier enrollment, configurable deployment, and enhanced transparency that enable your business to “choose your adventure.”

Integrating digital B2B payments will be critical for businesses and organizations that have been hard-hit by the pandemic, operating on razor-thin margins, or highly reliant on supplier relationships. Regardless of the pandemic’s impact, every CFO needs to optimize their 2021 cash management strategy. The right payments solution will:

• Implement quickly, with low internal resource engagement.
• Integrate with any bank, card issuer, ERP, and accounting software.
• Drive immediate expense savings, cash flow improvement, and new revenue.

As one of CFO Tech Outlook’s Top 10 AP Solutions, the Priority CPX platform and suite of integrated solutions can be implemented for organizations in a matter of days. Our platform is also white-labeled and built into the leading platforms offered by banks and fintech partners to monetize their payment networks. If you would like to know if your bank or accounting software is white labeling the CPX solution already, please contact us.