A new digital ecosystem is unfolding - one where real-time payments and faster receivables are becoming a reality. This, in turn, is creating an opportunity to turn traditional accounts payable (AP) and accounts receivable (AR) systems on their ears.
But, despite the advent of enhanced AP/AR technologies, legacy payment systems continue to dominate much of the financial services ecosystem resulting in inefficiencies that hamper payments for all businesses - especially small- and mid-sized organizations.
That was one of the key takeaways that came out of Stepping Up to the New Digital AP/AR Ecosystem, a recent webinar BillGO co-sponsored with Commercial Payments International (CPI).
BillGO’s President and General Manager of Biller Solutions, Cindy O’Neill, moderated the webinar, which brought together a panel of industry experts including Jim Walker, SVP of Business Development for BillGO’s Biller Solutions, Jennifer Coolidge, President and Founder of Nexus, and Rodney Schansman, CEO of BigCard Holdings, Inc.
And although their backgrounds are diverse, one thing they all agreed on: the new digital ecosystem is capable of enabling suppliers - as both billers and payers in the ecosystem - to benefit from real-time technologies that can give them greater control over cash-conversion cycles.
For O’Neill, it’s a transformation that is long overdue.
How We Got Here
To put things in perspective for webinar attendees, O’Neill recounted a presentation she gave a decade ago when she served as President of Priority Commercial Payments:
“Ten years ago I focused on the barriers to acceptance,” she recalled, “and what stood out to me when I looked back on that presentation was that the barriers we talked about then are still the ones we talk about today – cost of acceptance, manual processes, and challenges suppliers have with technology.”
Begging the question: why does the industry continue to wrestle with obstacles that were first identified a decade ago?
For Walker, the answer is simple: the landscape hasn’t changed much in the last ten years. Business payments continue to be a challenge, and, for many small business owners, the relative simplicity of paper checks remains a strong lure.
“On the supplier side, consumer payments are simple – you get a bill, you pay it,” he said. “But it’s harder for businesses because they have payments coming at them in a lot of different ways, from many directions. It’s complex, and I think that’s one of the reasons they fall back to checks.”
Making matters even more complex, Walker said, is the fact that the pain points around AP and AR systems are not universally felt by all billers and suppliers.
“Big companies have AP and AR automation programs in place and [they] focus a lot of attention on these areas,” he said, “but the smaller businesses haven’t had a chance to solve the complex problems …, at least not in an integrative way, so they haven’t focused on it and have instead stuck with checks.”
Coolidge, who leads product innovation and strategy for payments and supplier solutions at Nexus, agreed. “It’s incredible that we’re still struggling with [lack of adoption] a decade later,” she said, “but we’ve seen that companies have gotten really good at making archaic systems efficient. There’s some comfort in the status quo for these companies.”
New systems and new methodologies are available, she said, but the challenge is - historically-speaking - alternatives have not always proven to be as successful as advertised.
“There have been targeted point solutions that sometimes create their own issues,” she said, “so you’re just trading one inefficiency for another instead of looking at things as a whole.”
For Schansman – whose career includes leadership roles in commercial finance, payments and strategic investments – the most effective solution might be a combined effort. “No one company or solution is going to solve everything for everybody,” he said. “It’s going to take a combined effort of companies to get it done.”
COVID-19 and AP/AR Transformation
The disruption brought on by COVID-19 also took center stage in Stepping Up to the New Digital AP/AR Ecosystem. O’Neill asked the panelists to share what they’ve been seeing in AP/AR departments and processes following the pandemic - as well as what long-term impacts they predict will follow COVID-19.
In Walker’s estimation, COVID forced the industry to focus on and prioritize solving inherent AP/AR inefficiencies. “With the pandemic,” he said, “businesses saw the need to automate payments in the cloud and do everything from wherever they are. COVID made people realize that this needs to be a focus. Companies like BillGO, Nexus and BigCart are giving them the technology to make it happen.”
“COVID provided many companies a lifeline,” said Coolidge, explaining that many of the organizations she serves reacted to the pandemic by pivoting and adopting new technologies and processes.
“Companies that were stuck in the status quo, reluctant to move, just jumped on automation,” she said. “We saw an acceleration of our customers and buyers moving to electronic payments and electronic invoicing. We saw suppliers jump onto card acceptance. We saw this growth because companies couldn’t go to the office to process paper checks or send invoices.”
Serving the Underserved While Targeting the Long Tail
O’Neil wrapped up the webinar by discussing the “large number” of financial institutions lacking targeted supplier-enablement strategies and how, over the course of her career, she has seen a lot of focus on improving the AP side, but little emphasis on the AR component.
She invited panelists to hypothesize why.
“For a bank,” said Coolidge, “it might be more appropriate and comfortable to leverage their treasury relationship with a buyer who has a large spend file, enabling them to pay a lot of suppliers, generate ROI and add value to their relationship.
“On the flip side,” she continued, “it’s harder to scale, sell and solve for the masses of [small- and mid-size businesses] and suppliers you see on the other side. It’s an underserved market we need to solve for, but I can see how that might not have been the easiest place to start for these banks.”
For Walker, the onus for providing solutions to these underserved businesses falls with technology providers and fintechs. “We need to have easy programs in place for these billers to jump in, send their bills and get paid in real time so they get funds fast.”
“The SMB space is a big market the industry needs to solve for differently, with solutions that look at the whole end-to-end process more holistically” added Coolidge, “If we can provide solutions and services around that, it will make it easier for companies to adopt them.”
Want to be part of the entire session? Watch the on-demand webinar recording and hear from a panel of industry leaders from BillGO, Nexus and BigCart Holdings. For more insights, check out our exclusive 1:1 interview with Cindy O’Neill to learn more about the barriers slowing virtual card adoption, the art and science of supplier enablement, “co-opetition” between financial institutions (FIs) and fintechs and how BillGO is solving the decades-long problem of electronic payment acceptance.
Contact BillGO if you are interested to learn how Biller Solutions is streamlining payments for businesses by solving longstanding hassles like managing paper checks, tracking electronic payments and reconciling payments.