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Why digital payments are for modern businesses

Secure digital payment software solutions are becoming pivotal in the invoice-to-cash (I2C) cycle, significantly streamlining the payment process. They not only speed up cash flow and reduce operational costs for businesses—more on this below!—but also enhance B2B customer satisfaction by offering a more efficient and hassle-free transaction experience.

Those improvements shine clear when you evaluate digital payments vs. traditional payments. Integrating digital payment automation software benefits businesses' financial health and efficiency and nurtures positive customer relationships.

Keep reading to uncover details about different aspects of digital payments:

• The evolution of digital payments and their impact on B2B commerce

• Different types of digital payment methods and their suitability for various business models

• The future of digital payments and emerging technologies

• The benefits of digital payments, including improved cash flow, reduced costs, and enhanced customer experience

• The challenges associated with digital payments and strategies for overcoming them

• Best practices for selecting and implementing a digital payment solution

We’ll also walk through an overview of secure digital payment solutions so you’re better equipped to make informed decisions about how to use them to optimize your business operations and cash flow. 

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What does the B2B payments landscape look like?

The size of a customer directly impacts the complexity of a payment process. So, B2B payments are naturally more cumbersome and time-consuming than those between businesses and consumers (B2C), largely due to the sheer amount of the transactions and what’s been a slow rate of innovation in B2B payment processes.

B2B transactions can reach substantial amounts, often in the millions of dollars. Moreover, a significant number of corporations continue to depend on traditional checks. According to eMarketer, recent research shows slightly over 32% of U.S. B2B transactions still involve cash and checks.

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Check and cash transactions demand considerable manual processing by the seller. And this can delay the completion of B2B payments by weeks or even—as painful as it is to contemplate—months. To counter these challenges, digital payment solutions make transactions between businesses faster and more efficient.

The financial landscape is undergoing rapid change, with the shift from traditional payment methodologies like physical, check-based transactions to digital payment systems gathering incredible momentum. This is being propelled by the diverse array of benefits that secure digital payment software solutions offer to both B2B sellers and their customers, paving the way for a more efficient, secure, and user-friendly payment experience.

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Digital payments vs. traditional payments: Manual process headaches

Traditional payments have dominated B2B commerce since, seemingly forever. These involve transactions based on cash, checks, and bank/wire transfers; the “bill of exchange” arrived as a predecessor to the check during the late Middle Ages, and wire transfers came along when the telegraph went into service.

But all of them come with drawbacks including slower processing times, higher fees for processing checks or wire transfers, increased risk of theft or fraud, and a generally cumbersome experience for both parties—sellers and buyers—involved. Here are just some of the many issues that arise from manual payments processes:

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What’s driving adoption of secure digital payment software solutions?

When they consider digital payments vs. traditional payments, companies are increasingly gravitating towards digital payment solutions for several reasons.

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• Ease of use: Customers can make digital payments that can be made anytime, anywhere, without the physical constraints associated with checks or cash.

• Speed: Transactions are processed instantly or within a few hours with digital payment software, as opposed to days for checks to clear.

• Improved customer experiences: This is thanks to the convenience and accuracy of digital processes, which remove human error and minimize disputes.

• Lower costs: Digital transactions often incur lower fees than traditional banking or check processing services, and automating them means far less manual labor is needed.

Why is ease of use so high on the list? Because by offering versatility in payment methods using secure digital payment software solutions, B2B sellers can satisfy what’s increasingly becoming a basic customer expectation: That making a payment should be convenient and easy. Fail to honor their preferences at your own risk!

Corporations understand the urgency involved. According to research byJ.P. Morgan and Forbes, 85% of global executives feel optimizing payments is critical to giving their customers satisfactory outcomes.

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Why switch to digital payments? The benefits for B2B sellers

In comparing digital payments vs. traditional payments, it’s obvious that secure digital payment software solutions offer a myriad of advantages for B2B sellers when it comes to streamlining operations, enhancing cash flow, and improving customer satisfaction. Truth be told, it’s a roster of benefits that traditional payment processes would never be able to deliver.

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Types of digital payment solutions

Digital payment methods for businesses include a broad range of technologies that offer a stark contrast to traditional payment methods in how they optimize and accelerate the payment process.

Digital payment tools fall into several categories, including but not limited to:

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The future of digital payment tools

The trajectory of digital payment systems is irrevocably headed toward even more innovative and secure technologies that will add an extra layer of security and convenience for both sellers and buyers. They’ll offer unprecedented levels of efficiency, security, and personalization in financial transactions.

Here are some of the near-future digital payment methods for businesses that are already impacting the B2B payments landscape:

• Virtual credit cards: These enhance security for online purchases by generating temporary card numbers, which protect real account details from cyber threats. This feature has gained popularity among finance leaders, with 55% of CFOs reporting increased usage due to digitization trends.

• Real-time payments: These are already gaining ground across the financial industry by allowing immediate fund transfers that reduce payment delays and improve financial fluidity. This has obvious benefits, as it permits quicker access to funds and improves cash flow management. According to PYMNTS.com, 81% of large retailers say real-time payments are very or extremely important for their B2B transactions, with 61% percent of manufacturers and 60% of insurers agreeing.

• Blockchain and cryptocurrencies: While still in its early stages, blockchain technology promises unprecedented levels of security, transparency, and efficiency in financial transactions due to its potential to provide a secure, immutable online ledger. Cryptocurrencies, though volatile, could also have a part in enabling frictionless cross-border transactions.

• Artificial intelligence (AI) and machine learning: AI-powered tools can enhance fraud prevention, optimize payment routing, and improve customer experiences by extracting insights from huge amounts of transactional data, not just to identify suspect anomalies but to find ways to improve processes. According to Doug Hathaway, Versapay’s VP of Engineering, AI can even make payments and accounts receivable more human, by “... removing much of the legwork needed to apply payments. When this happens it’s [accounts receivable] more engaging, and you can access more data, making it less mundane.”

• Embedded finance: Integrating financial services within non-financial platforms (such as e-commerce platforms or ERP systems) enhances user experience and opens new growth opportunities and revenue streams by offering finserv tools directly within their existing platforms.

• Request-to-pay: This innovative digital payment tool allows businesses to request payments from customers directly, improving the predictability of cash flow and invigorating business-client relationships by offering greater transparency and responsiveness in transactions.

• Biometric, voice and touch payments: Voice-activated payments, facial recognition and touch-based authentication are emerging as secure digital payment tools, promising convenience and improved security by enabling transactions through simple voice commands or touch gestures that use biometric authentication. These cater to modern consumer tastes for quick, intuitive and efficient device and account interactions.

Digital payment systems and technologies that may lie farther into the future include:

• Central bank digital currencies (CBDCs): Many governments are, dare we say, getting their geek on and considering roll-out of their very own digital currencies, officiated by the high and mighty central banks. CBDCs might have superheroic potential in B2B by zapping through the old-school barriers to cross-border transactions, giving global commerce a Red Bullish boost.

• Quantum computing:It’s just offstage now but it’s getting ready for its turn in the spotlight, when it will probably transform how banking and payment systems work. Quantum systems are hundreds of millions of times faster than “conventional” computers. They could revolutionize fraud detection, accelerate and add intelligence to payment routing, and power cryptographic currencies and payment security tools that’ll create no end of frustration for hackers.

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The steps in implementing a digital payment platform

After reviewing the multiple benefits of adopting secure digital payment software solutions, who wouldn’t want to jump in with both feet first to capture them for their organization? But first, a little patience, planning, and homework are in order.

Here are the best steps to follow for successfully implementing a digital payment platform.

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1. Assess your current payment processes

First of all, it's crucial to understand your current payment landscape. So conduct a thorough assessment of your existing processes, including:

• Payment methods: Identify the payment methods now being primarily used by your customers—checks? ACH? Credit cards?

• Payment cycle: Analyze the average payment cycle time and identify any blockers or bottlenecks.

• Payment processing costs: Appraise the fees and costs associated with current payment methods.

• Customer preferences: Know what their preferred payment methods are (which aren’t always the ones they’re now using) and identify any pain points they’re experiencing.

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2. Pick the right digital payment platform

It’s essential that you choose the digital payment platform that’s optimal for your business needs, so weigh key factors such as:

• Payment methods: Ensure any platform you’re considering supports your desired payment options (credit cards, ACH, digital wallets, virtual cards, and so on.).

• Integration capabilities: Judge how seamlessly the platform integrates with your existing key systems like ERP, e-commerce, and accounting.

• Security features: Don’t let any platform onto your short list that isn’t PCI compliant and doesn’t possess robust security measures to protect sensitive payment data.

• Cost structure: Compare pricing models and fees to find the most cost-effective option.

• Customer support: Evaluate what you’re getting after purchase in terms of the quality and availability of customer support services.

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3. Integrate the platform

Successful integration of a digital payment platform demands detailed planning and execution around:

• System integration: Connect the digital payment platform with your current systems (ERP, e-commerce, invoicing) to ensure smooth data flow.

• Employee training: Educate staffers about the new payment tools and processes and on how to handle customer inquiries.

• Customer communication: Get the word out about the new payment options to your customers and provide clear instructions on how they can take advantage of them.

4. Drive customer adoption

Encouraging your customers to make the switch to digital payments is a linchpin in maximizing the benefits of your new system because their adoption rate is arguably the most important contributor to digital payment platform ROI. So, never simply assume that “if you implement it, they will come.” That only works in baseball. Execute pre-, during and post-launch adoption tactics like:

• Prepare your team: Involve AR staff early to identify impacted processes and train everyone on the new system.

• Clean customer data: Verify and gather missing email addresses in your records.

• Send personalized invitations​​: Send customers a personalized email directly from the new platform.

• Payment preferences: Allow customers to choose their preferred payment method (and promote the fact).

• Incentives: Offer discounts or rewards for customers who switch to digital payments.

• Education: Provide clear instructions and support via email to help customers transition smoothly (while reminding them of how they’ll benefit!). Pre-advise them about emails from the system to avoid spam filters.

• Incentivize adoption: Offer discounts, fee waivers, or extra payment options for early users. Be clear about any penalties for failing to adopt digital payments.

• Post-launch engagement: Re-engage hesitant customers with targeted messages spotlighting portal benefits and motivate internal teams with adoption targets and rewards.

• Testimonials: Let your customer base hear how initial adopters are praising the new system.

5. Measure success and optimization

Continuously monitor the performance of your digital payment platform and make any necessary adjustments based on key metrics that ought to include:

• Payment processing time

• Payment acceptance rate

• Customer satisfaction levels

• Cost savings

• Fraud rates

• AR turnover ratio

• Expected cash collections

• Average collection period

• Days sales outstanding

• Collection effectiveness index

• Average days delinquent

• Number of revised invoices

• Bad debt

• Percentage of high-risk accounts

• Staff productivity level

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Choosing the right digital payment solution provider

Why switch to digital payments? Because the upside is outstanding. But choosing the product that’s best for your business from among competing secure digital payment software solutions is mission-critical if you’re aiming to provide seamless and secure B2B transactions. 

Here are the key features you should look for in a digital payment system and its provider that can make that happen without headaches—or buyer’s remorse.

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By getting answers to these questions, your organization can pick a digital payment platform that actually aligns with your specific needs, enhances customer experience, and mitigates risk.

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Common challenges in adopting digital payment solutions

Transitioning to a digital payment solution may involve overcoming hurdles, both internally and externally. Use the contingency measures suggested below if you run up against any of them.

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Overcoming internal challenges

• Integration complexities: Integrating a new digital payment system with existing ERP, e-commerce, and accounting software can be intricate and require scrupulous planning and possible IT support. Some leading solutions simply remove this hurdle by including out-of-the-box integration with top ERPs and other systems.

• Employee resistance: Some staffers might resist change and feel more comfortable with familiar, manual processes. Overcoming this requires clear communication, training, and demonstrating the benefits they’ll see from a digital payment solution. After all, who enjoys endless keystroking and paper cuts?.

• Security worries: Implementing robust digital security is vital to protect sensitive payment data, so a business may have to invest in security infrastructure and employee training.

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Overcoming external challenges

• Customer resistance: Some customers may balk at adopting digital payments due to security concerns, a lack of familiarity, or a preference for traditional methods. Getting them past this demands communication, education, and possible incentives.

• Payment infrastructure: In some regions or markets, an infrastructure for digital payments may be underdeveloped, making options limited and causing processing delays.

• Fraud and chargebacks: Solid digital payment systems will include fraud prevention measures, but businesses still need to be vigilant and have processes in place to handle fraudulent transactions and chargebacks.