Technology Aligns SMB Buyer, Supplier Payments

American Express - B2B and Digital Payments: Improving Cash Flow Management for SMBs in 2023 - Nov/Dec 2022 - Explore how small and medium businesses (SMBs) can improve cash flow management in 2023

As the digital transformation of consumer payments continues at a rapid pace, business-to-business (B2B) payments often remain mired in legacy systems and manual processes. Small businesses in particular need an easier payment experience and help with cash management, but their path to getting there can be fraught with obstacles—not the least of which is an inherent dilemma: While suppliers would prefer immediate access to funds, buyers looking to hold their funds longer. PYMNTS research found that 38% of SMB buyers prefer to pay suppliers via automated clearing house (ACH) or check, but more than half of small and medium business (SMB) suppliers prefer to receive payments through faster channels such as real – Time payment or same day ACH.

The respective pain points of buyers and suppliers reflect this difference. On average, SMB payers note several issues they often encounter when making payments, including the need for manual review, time-consuming processes, and a lack of financing options. Meanwhile, average pain points for SMB suppliers vary, citing lack of transparency on when they receive payment, lengthy invoice approval processes, lack of integration with other systems, and length of time before payment is received. However, a single solution can eliminate both sets of challenges.

Unleash the Power of an All-In-One Platform

All-in-one payment platforms have become a staple for SMBs aiming to simplify financial operations management and gain a more comprehensive view of cash flow. According to PYMNTS research, 59% of SMBs say these tools save time and 52% say they simplify cash flow management. 41% found they simplified accounts receivable tracking, and 32% saw working capital improvements using the technology.

The efficiency of back-office digitization is not the only benefit for SMB buyers. The all-in-one payments platform allows businesses to purchase supplies by credit card — including from suppliers that don’t accept credit cards. Even if buyers pay card fees, the benefits outweigh the costs thanks to the cash float that extends payment terms from 30 days to 100 days, plus card rewards, early payment discounts and tax breaks. Thus, a single platform with customization features enables both buyers and suppliers to choose the most convenient payment method to meet their specific needs.

However, many SMBs are still not convinced. While 76 percent of executives surveyed said SMBs would benefit from an all-in-one platform, not all SMBs understand the benefits. Fifty-seven percent of SMBs are not interested in using such tools as a replacement for their current setup due to concerns about complicating accounts payable (AP) and accounts receivable (AR) processes. Only 18% of SMBs are very or very interested in trying an all-in-one payment platform to receive payments, with concerns about complexity and cost of use being major barriers.

Technology Partnerships Can Boost Cash Flow Management

SMEs can reap major cash flow benefits by facilitating faster payments. A report on delayed payments in B2B found that paying within 30 days increased cash flow for SMEs by 66%, while paying within 60 days increased cash flow by only 10%.

To speed up payments, SMBs are investing in and partnering with new solutions. Another report found that SMBs are the most likely to invest in technology to support programs that help them win new customers and improve financial management. SMBs rank improving collaboration with external customers, suppliers, and partners as the project that provides the best return on investment, illustrating that improvements don’t happen in silos.

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