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Digital Transformation in Commercial Payments

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Historically, commercial payment methods have relied on slow-moving paper cheques and bank-to-bank transfers to remit payments between businesses. While the COVID-19 pandemic accelerated a digital transformation among consumers and how they pay businesses, there remains a high degree of legacy payment methods still in use for how businesses pay other businesses for goods and services.

Globally, paper payment transactions (cash and cheque) still accounted for 29.3% of commercial payments value in 2022

Source Euromonitor International

Yet a digital transformation in B2B commercial payments appears to be afoot. The consumer payment user experience encountered by younger, digital-native business managers is spilling over as demanded upgrades to the commercial payments process. The personal buying experiences encountered by B2B buyers directly impact their expectations for business purchases. Financial business decision-makers across all types of organisations increasingly seek more efficient, streamlined, intuitive digital payment management tools.

Euromonitor International and Discover Global Network conduct primary research on the challenges and priorities in B2B commercial payments

In March 2023, Euromonitor International’s Payments and Lending Consulting Group conducted a survey to collect quantitative insights from owners, senior leaders, and financial business decision- makers at more than 1,800 companies, spanning 16 countries and six industry segments. The purpose of the research was to uncover the use cases, payment preferences, pain points and challenges, and future investment decisions related to B2B commercial payments for both large corporates, and small to medium-sized enterprises (SMEs).

One very clear result is the expressed intention to more aggressively embrace digital payment methods across expense categories.Digital Transformation in Commercial Payments Chart 1.svg

Large companies plan to invest in digital platforms to better manage payment outflows to their suppliers

Large corporations assert that their number one commercial payment challenge relates to how they manage, pay, track, and reconcile supplier payments. This impact is felt by Procurement, Accounts Payable, and Travel Expense functions within organisations. Managers are seeking commercial payment suppliers that can deliver operational efficiencies, integrate into existing back-end software platforms, save their organisation time and money, and provide greater line of sight on performance across functions within the company.

A white paper focused on the commercial payment challenges being faced by large corporates, titled “Navigating the Global Digital Commercial Payments Landscape”, details the following as their most significant pain points:

  1. Inconsistent processes and payment requirements from suppliers
  2. Lack of transparency and tracking of supplier payments
  3. Inefficient or ineffective reporting and reconciliation
  4. Accessing fraud prevention tools
  5. Dealing with cross-border currency fluctuations
  6. Better budgeting and forecasting tools for employee travel
  7. Availability of financing

To address these challenges, commercial payment providers have developed new solutions to solve these pain points. Meanwhile, executives at large businesses are ready to invest in ways that will help them better manage their financial outflows.

67% of large companies surveyed indicated the intention to invest in B2B commercial payment process improvements in the coming 12 months

Source: Euromonitor International

Furthermore, 60% of large companies plan to use an automated invoicing platform to better manage and track supplier payments.

SMEs are more flexible and quicker to adapt but often run into resource constraints

Small to medium-sized enterprises (SMEs) are eager to save time and money when managing B2B payments. The pandemic accelerated the pace of digitisation for small firms, many of which pivoted to e-commerce, along with more sophisticated technologies for accepting customer payments. SMEs are building on that momentum to digitise their back-office operations, optimise transactions with suppliers, and automate inefficient manual processes. While this is a complex undertaking, small business appetite for digital transformation remains high.Digital Transformation in Commercial Payments Chart 2.svg

SMEs face different challenges depending on their size, industry, and geography. Saving time and money are the key motivators for seeking new commercial payment solutions providers.

When considering a payments vendor, 56% of SME survey respondents are motivated by saving money, 47% by saving time, and 45% by finding a unified platform to manage their outgoing payments

Source: B2B Payments Survey for Businesses - Commissioned by Discover Global Network and Euromonitor International (fielded March 2023)

Finding a partner that can provide flexible, customisable solutions that address the distinct needs of a small or medium-sized business is going to become an important selection criterion moving forward.

According to a board member at a logistics trade association serving members in Singapore, Malaysia, and the Philippines: “The challenge for SMEs is finding the most cost-effective provider [given their revenue size]…Banks are traditionally used for commercial payments to suppliers in SE Asia, even by smaller firms, but they are often slow and costly and aren’t offering the latest technologies…Smaller firms just don’t know where to find the best option.”

SMEs want to take advantage of the digital innovations in commercial payments that will simplify and better organise how they pay their suppliers. Business owners are seeking access to invoice payment platforms, small business commercial card solutions, and travel management tools tailored to fit the needs of their distinct company characteristics.

Download our new white paper, Navigating the Global Digital Commercial Payments Landscape, to learn more about the commercial payment challenges faced by large companies and the digital tools that can address them.

Our SME-focused white paper, Commercial Payment Priorities for Small to Medium-Sized Enterprises, is an opportunity to learn more about the 10 payment priorities being expressed by smaller organisations.

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