B2B payments digitization has been on the mind of finance chiefs for years, but it suddenly seems that adopting technology to automate invoice processing or B2B payments is no longer enough to satiate CFOs’ digitization appetites.
This mindset shift became dramatically clear in PYMNTS’ The Strategic Role of the CFO, a report that surveyed hundreds of finance leaders about how the pandemic has altered their accounts payable (AP), accounts receivable (AR) and B2B payments strategies. The majority agreed: Digitizing business payments is no longer solely about automation, but about a more impactful transformation of the organization.
O’Neill, along with Twilio Global Head of Financial Services Bijon Mehta, reflected on the findings that reveal a shift in CFOs’ mindsets that aims to wield AR and AP transformation to drive more meaningful connections between suppliers and their business customers.
For years — decades, even — the B2B payments modernization conversation has centered around ridding the back office of the paper check and embracing technologies to automate some of the most manual tasks. While the global pandemic has certainly intensified the pressure on AR and AP teams to accelerate that push, Mehta said that today’s finance leaders are looking to go further than the “broken record” topic of digitization.
“When you have such a fundamental impact on your business, all bets are off, and you have to really rethink how you engage, how you serve, how you support customers,” he noted. “That’s led to not just cosmetic changes, but also really rethinking the workflow.”
In what may be the most surprising finding of PYMNTS’ survey, nearly all CFOs surveyed (96 percent) agreed that transforming business payments isn’t solely about accelerating cash flows or reducing costs — although they do still view seamless and effective payment capabilities as essential in that regard. Rather, it’s about improving B2B relationships.
For more and more CFOs, that means deepening the connection between AP and AR. That’s not just within the enterprise, either, noted O’Neill; this effort also means driving deeper relationships between the AP and AR departments of an organization and its business partners.
“We think that’s where the root cause of transaction problems lie, is that lack of connectivity, and that lack of ability to collaborate both within the company and across the bounds, between supplier and buyer,” he said.
CFOs Take Charge
Historically, CFOs have struggled to push beyond the inner inertia that so often prevents change within an enterprise. One might assume that it’s a younger generation of CFOs taking the charge toward B2B payments transformation — but as PYMNTS’ survey revealed, it’s actually the most experienced CFOs taking the reins, as 75 percent of finance chiefs with at least 10 years of experience prioritize transformation in their digitization efforts.
A lack of resources and the burden of technological integration have typically stood in the way of progress, but B2B FinTech innovation continues to lower the barriers to digital transformation with out-of-the-box solutions that can streamline onboarding with minimal disruption.
What’s more, noted Mehta, while the organizations of yesteryear may have lacked the technologically savvy talent to support these changes, digitization today is a part of every department in the back office, with firms investing in the talent with skillsets to guide digitization initiatives.
With the most experienced CFOs now pressing for more meaningful changes, organizations are finding that resources are aligning to create desired results. “When it raises in priority, there is a much better likelihood that finance will find a way to get the support and resources they need,” said O’Neill.
These shifts beg the question as to why CFOs have finally begun to break through the inertia against change that has, for so long, only led to minimal tweaks in B2B payment workflows. The pandemic and the consequential need to embrace the cloud certainly had something to do with it — but as O’Neill and Mehta acknowledged, there is a deeper pattern at work.
Unprecedented growth in consumer power has created an ecosystem of business customers who are similarly demanding better user experiences — and firms that are willing to switch suppliers if they don’t receive it. “It only takes one customer churning because of the friction in doing business” for a CFO to realize how imperative it is to embrace transformation in B2B payment workflows and prioritize the business-customer relationship.
Indeed, noted Mehta, organizations are often “bombarded” with opportunities and offers to switch providers of many kinds. When it comes to strengthening the buyer-supplier relationship, aligning AR workflows with the needs of a customer’s AP department is essential.
Accomplishing that goal must go beyond accepting electronic payments. While finance departments have historically sat behind the curtain, O’Neill said it’s now time to lift that curtain and place finance teams and leaders at the forefront of digital transformation.
The technology today exists to support CFOs’ enthusiasm to go beyond automation to drive efficiency and cash flow, and build flourishing customer relationships — and shifting minds are lifting barriers to embracing tools. In the wake of paper checks, technologies like machine learning (ML) will step in to not just automate workflows, but seamless operations, more satisfied clients and a future that Mehta said has “a lot less friction in it.”
“That won’t just be an exception, that will be the rule — because there will be better integration between other departments and the finance department,” said O’Neill. “And all of that goes toward better customer experiences — stickier customer relationships, revenue growth and, ultimately, a competitive advantage.”