The world of business-to-business (B2B) commerce changes constantly; the current climate for enterprises at all levels is no different. Ever-increasing globalization and technology innovation, as well as the quickening speed of business, has made it imperative for organizations to take a hard look at the tools used to conduct business with trading partners. Doing business today is harder, and enterprises experience increased competition every quarter. The good news is that the upside of success in a global marketplace is much greater now than it has ever been.
Within this rapidly changing environment are two important technology factors that have already altered the way enterprises both large and small operate. Business networks connect trading partners across the entire supply chain, allowing many-to-many relationships and near-instantaneous communication around invoice status and approvals. Meanwhile, electronic payment (ePayment) technologies allow for buyers to pay suppliers quicker than cutting a paper check, and financing methods simplify supplier payments even more. Today, we’ll take a look at the impact business networks and ePayments both have on the B2B eCommerce landscape and offer some insight into what we view is coming down the line.
Business Networks: The Future of Collaboration
The new global marketplace has forced enterprises to rethink the way external relationships are initiated and managed. With increasingly global supply chains that experience a time-frame shrinkage each year, more organizations realize a dependence on suppliers to operate. Business networks present a huge opportunity for trading partners, seeing as these networks stand at the crossroads of enabling stronger relations between buyer and suppliers.
Business networks enhance relationships by enabling efficient transactions and supporting the necessary communication and collaboration around these selfsame transactions. Trading partners are connected in efficient ways and can gain visibility into transaction and invoice workflows, which results in eliminating many of the tactical exchanges—like invoice-status calls—that take up time in manual invoicing. This allows for organizations to focus their resources on more strategic activities and produces cost savings for the enterprise because its accounts payable team isn’t constantly fielding inquiries from internal and external stakeholders.
In terms of logical places for development, business networks have the potential to evolve into platforms that work like the iTunes app store. As networks become ubiquitous and thrive worldwide, there’s opportunity for third-party solution providers to offer their services on these platforms to the larger network population. Tradeshift is one provider who launched its network with this type of vision.
This activity will lead to a true network effect, where each additional participant on a particular service adds value to all the other participants on the network. The more third-party “apps” start appearing on business networks, the more innovation in B2B commerce will accelerate, in the view of Ardent Partners.
ePayments and Supply Chain Finance: Onwards and Upwards
Electronic payments and financing systems, such as supply chain finance and factoring, are perhaps some of the most transformative tools in the accounts payable solution set. The cost of mailing a check is significantly higher than that of making an electronic payment, and late payments squeeze a supplier relationship. Many large and mid-market enterprises recognize, in this new business environment, that they need to alter how they pay suppliers; this translates into effective platforms that allow for secure and low-cost payments as well as remittance information provided direct to suppliers.
Supply chain finance is one area that has been talked about for many years, but the needle hasn’t moved except within a few of the largest organizations. There remain reams of paper invoices coming in and thousands of paper checks going out—both of which impede operations between trading partners because of a lack of visibility into invoice and payment status. As companies adopt more ePayables solutions, which Ardent Partners defines as anything that automates all or part of the accounts payable workflow, more organizations can decide with both visibility and insight as to how they want to pay suppliers for maximum (and sometimes mutual) benefit. On the other side, suppliers can decide how and when to offer early payment discounts.
ePayments and financing solutions have experienced an upswing in popularity, bringing the marketplace to the very early stages of a transformation in the B2B payments market. For decades, enterprises have relied on banks with batch-file transfers and a very slow and clunky way to make payments. This can be related to the shift from mainframes to personal desktop computers, or the change from DOS to Windows. AP departments require solutions that are much more usable than the current paradigm, solutions that will allow organizations to manage all their payments in a centralized dashboard. Once this greater visibility is achieved, enterprises and suppliers can benefit from the timing of payments and the potential discounts that are offered or taken.
Final Thoughts
The future of accounts payable lies in improved collaboration and communication between trading partners. Business networks offer the distinct opportunity to improve relationships from a technology perspective, while ePayments and financing solutions automate and create value along the last mile of the ePayables workflow. The speed of business is only going to increase as time goes on—smart enterprises understand this and will find ways to leverage technology innovation like business networks and ePayments to compete in the global marketplace.
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