7 minute read
Digital handshake
Digital
Embracing digital isn’t just an aspiration for B2B firms – it’s an urgent commercial imperative if you want to build lasting customer relationships, enable sales and access credit, say TreviPay’s Brandon Spear and Digital River’s Adam Coyle
The devastating impact of the COVID-19 pandemic has reshaped our lives forever.
Measures by governments to try to contain its terrible toll, including lockdowns, have forced behavioural changes on populations to an unprecedented degree. And that meant legions of businesses and consumers suddenly had to pivot to doing things digitally.
The evolution towards e-commerce, steered mainly by a younger generation of tech-savvy consumers, suddenly turned into a revolution, affecting everyone, of every age. And it’s a transformation from which there will be no return as customer demands and expectations have permanently changed, both for business-to-customer (B2C) transactions and, increasingly, for business-to-business (B2B) ones, too.
Against this backdrop, two companies that are working together to further shake up the B2B payments space are digital payments provider TreviPay, which provides credit lines for businesses akin to buy now, pay later (BNPL) terms, and Digital River, an e-commerce enabler that provides a merchant of record solution covering payments, taxes, compliance, fraud mitigation and logistics. transaction completion. That’s where people like Digital River and TreviPay offer great solutions that people can leverage for that experience.”
Brandon Spear, the CEO of TreviPay, which deals with $6billion of transactions across 27 countries each year, is in no doubt that the pandemic super-charged B2B payments digitisation.
“It’s been a macro trend for a while but there’s been a huge acceleration of this in the last two years, principally driven by the pandemic,” says Spear. “From our point of view, it’s really pulled forward, or compressed, three to five years’ worth of digital transformation into probably the last 18 months.”
Adam Coyle, CEO of Digital River, is also convinced that other changes that were borne out of necessity, like sales pitches using digital conference calls rather than face-to-face meetings, are here to stay.
“I think the days of us getting on airplanes and flying hours to a customer’s site to have a one-hour meeting are gone,” he says. “The buyers want to have an experience that is very much like the consumer experience that they’ve become accustomed to in their personal lives.
“That’s where we’re seeing this huge transformation in B2B, both in terms of online go-to-market and online
THE WAY TO GO
Given the global pace of change, Spear warns firms that have yet to digitise could quickly find themselves becoming uncompetitive. Indeed, research published in 2021 by PYMNTS and Worldpay in their Global B2B Payments Playbook, has shown that digitising B2B payments data and managing it via enterprise resource planning (ERP) systems, can improve collections, days sales outstanding (DSO) and operations.
The study showed that just under half of firms that have adopted automated accounts receivable (AR) processes had lower overall delinquency rates; 62 per cent reported reduced DSO; and 72 per cent made savings on their operational costs.
In addition, 87 per cent of those that had incorporated automated AR technology said it had produced faster processing speeds. Another 79 per cent said it had improved team efficiency, while 75 per cent thought it had provided a better experience for their customers.
While it’s not too late for businesses to make the change, Spear says they should hurry up.
“I would definitely say that the cost curve with all of these processes moving to a more digital-first experience is being significantly shifted,” he says. “So, if a company has not yet embarked on a digital transformation journey, at some point it’s going to become uncompetitive. It’s not too late, but if they wait much longer, maybe another two years, the ship may well have sailed.”
Thought-provokingly, Coyle adds, it is now too late for companies to go it alone when going digital, as many early adopters did.
“I think the smart people who are now saying ‘I’m going to move into this online B2B model’ are the ones who are also saying ‘you know what? I’m going to go
Joined-up approach:
Digitisation helps smooth processes
look for the best solutions that are available to me out there, and I’m going to put a solution together around other components that can be delivered through third parties’. That’s to really catch up, in some ways, with the marketplace,” he argues.
Of course, a switch to digital is not without risks, and fraud is probably top of a pile that also includes cyber-attacks and security.
Spear reveals that TreviPay sees ‘thousands of cases a year’ of its customers being approached by ‘bad actors’, pretending to be genuine companies to fraudulently obtain lines of credit to buy goods.
“It’s a bit of an arms race in terms of how quickly you can flush out these sorts of bad actors, and look at a variety of other data sources and information, to try to validate, confirm that the company is a real company, that the entity representing the company is a real company, and so on,” Spear says.
“If you’re just trying to do this yourself sticking points, and is another area where digitisation can massively help.
That process is expected to become even smoother with the introduction, later this year, of the ISO 20022 global payments messaging standard, which will add significantly more transactional data to every payment. It’s an area which clearly excites Coyle.
“I think, particularly in the B2B context, we’ve only begun to scratch the surface of what’s possible,” he explains.
“The B2B firms really have the ability to begin to think about their buyers in a much more consumer-like way and ask what patterns they are seeing from these customers. Most businesses haven’t even touched that kind of analysis, but the possibilities are almost endless when it comes to profiling and understanding their customers, their buying behaviour and the demands in the marketplace.” field by vastly improving the availability of trade credit for smaller businesses.
“The open banking approach that’s coming is going to facilitate the provision of credit and trade credit, which is obviously what underpins the whole BNPL space,” he explains.
“Open banking, where you can actually see, or have access to, what the cashflows of a business are, puts you in a position to provide lines of credit to those smaller businesses that can’t necessarily get it today. So, in some ways there’s a democratisation of credit coming. The more we can do that, over time, the more it’s going to free up a tonne of working capital for these smaller businesses, which are probably the end of the market that, frankly, needs the capital more than any other segment.”
now you probably don’t even know what you don’t know around how dangerous some of these challenges are and how quickly you could get exploited.”
Spear suggests that a version of business digital identity verification could be a solution.
“I wonder, as in the commerce world, if there’s going to be some form of digital ID that becomes more pervasive, as a way of knowing you’re dealing with a real company, and somebody who’s in a position of authority in that company,” he says.
Of course, the sheer complexity of many B2B payments, which can often involve multiple stakeholders across different borders, provides enormous potential for
Spear explains that TreviPay is already working with businesses to help them better analyse the data they now acquire from directly dealing with customers online and use it to make key decisions. But he also emphasises that the payment experience is a vital factor in developing brand loyalty.
“If all things are equal, if the products are similar, if the services are similar, if the prices are comparable, then our general experience is that, if you’re easier to do business with – you can provide lines of credit to your customers, you can provide longer payment terms, you can give them all the data they need on their invoices, so that it’s simple for them to make sure that you get paid – then that will increase your share of wallet.”
Coyle believes the relationship between supplier and customer has radically changed for those who have switched from a paper-based world to an online one.
“One of the beauties of the direct-to-consumer online world is that you can provide optionality, so that the seller can get what they need out of a transaction and the buyer can get what they want, and everybody walks away satisfied,” he says.
Another pivotal change for the B2B world is the introduction of open banking, which Spear says will help level out the playing
