How businesses can leverage digital solutions to boost their cash flow and grow

Digital payments helped businesses get paid safely and efficiently throughout the COVID-19 lockdowns and associated restrictions. But as economies reopen many challenges still face businesses including supply chain disruptions, the ‘great resignation’, rising inputs such as fuel, and the expense of reopening. These business challenges make now an opportune time to build on the processes optimised throughout the pandemic, especially across B2B trade.

Transforming payment processes with digital technology and integrated cloud-based solutions not only helps businesses get paid faster but also delivers many efficiency-based benefits as well. In this article, we outline some key trends and opportunities in B2B payments, and how your business can leverage these developments for stronger cash flow and growth.

Over half of B2B payments are processed late, and it’s a major resource drain

Over 53% of B2B receivables in Australia are paid late. Not only do late payments cause cash flow problems, but chasing up these payments takes valuable time and resources. Further, according to a recent survey of Chief Financial Officers of medium-to-large businesses, companies spend about 520 hours per year on accounting and administrative tasks, including manually processing invoices and payment reconciliation. While recent regulatory changes, such as the 2022/23 Federal Budget cash flow promise and Payment Times Reporting Scheme in Australia, are a valid step in reducing payment times, they don’t resolve the root cause of late payments and inefficiencies across the supply chain — outdated processes and payment infrastructure.

Global digital B2B payments trends: eInvoicing and virtual cards

Adoption rates of digital B2B payments technologies vary around the world. Currently, developing regions in Africa and South-East Asia are leading the way with growth driven mainly by the uptake of innovations such as virtual cards. It is projected that the global virtual card transaction value will reach $6.8 trillion by 2026.

Digital payments technology delivers a range of benefits to businesses and their customers, including:

• Stronger cash flow
• Faster, more accurate reporting
• Reduced days receivable outstanding
• More accurate cash flow forecasting and planning
• Time and labour savings
• Increased security
• Easier access to working capital

With an automated B2B payment solution, businesses can reduce their invoice processing time by 74% and benefit from a straight-through rate of 67.2 per cent. Accepting digital payments is only one part of the puzzle, working towards a holistic approach will deliver the highest return on investment (ROI) in the long term.

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Businesses that implement integrated technology solutions, including integrated payments systems, will maximise their ROI while transforming systems and processes across the organisation. This includes automating accounts receivable and accounts payable processes, streamlined reporting and reconciliation, and optimising other business areas such as procurement and credit management.

This article is for general information purposes only. Consult a qualified financial advisor regarding any changes to or decisions about your business’s finances.