American ExpressAmerican ExpressAmerican ExpressAmerican ExpressAmerican Express
United StatesChange Country

B2B Looking to Cash in on Payment Automation

By Kristina Russo

Automating accounts receivable (AR) payments can make incoming cash flows faster and more efficient and help small-to-midsize enterprises (SMEs) avoid the cash-flow problems that contribute to the failure of so many new businesses. However, unlike with consumer-oriented peer-to-peer payment apps, invoice-to-collection automation solutions for B2B payments have been emerging slowly for a variety of reasons—frequency, number of people involved, industry regulations, etc. Mostly, however, it’s the result of sheer scale: the B2B payment industry weighs in at $18.5 trillion per year.1

That may be about to change. Recognizing a massive opportunity and appreciating the pervasive business need in enterprises of all industries and sizes, financial-technology (fintech) companies are creating what are designed to be reliable, technology-rich solutions aimed at reducing the costly, labor-intensive AR process. Fintechs are rolling out their products both directly and through reseller arrangements with banks.


So, how might these integrated receivables solutions reduce the friction inherent in the AR process and make receiving B2B payments easier?


The Business Need for B2B Payment Automation


AR is one of the biggest assets on a company’s balance sheet, and a critical component in working capital management. Yet, until recently, AR processes, especially regarding payments, remained a predominantly manual process, because the majority of B2B payments were made by paper check. In recent years, the diversity of payment channels—automated clearing house (ACH), electronic checks, payment cards, payment gateways—has amplified the complexity of the cash-application part of the AR process. SMEs often turned to their banks, who had provided traditional lockboxes in the past, for new solutions with varying degrees of success.


As a result, AR workflow remained a largely tedious, manual process fraught with error and rework, from customer invoicing on the front end, through payment application on the back end. Experts have long identified the payment-application piece as one of the most highly visible places to achieve efficiencies and reduce costs through automation because of its manual, high-volume, low-value history.


In addition to reducing costs, other studies suggest that automating the B2B payment process can speed up payments—in some cases cutting invoice-to-payment time by up to 80 percent.2 The improvement to cash flow and liquidity in these cases in substantial.


How Do These B2B Electronic Payment Systems Work?


In the most comprehensive integrated AR systems, the three main steps of invoicing, payment, and cash application are converted to a digital format. Electronic invoices are generated based on company sales data, and delivered electronically on set dates, including preprogrammed reminders.3 Multiple methods of payment are supported, such as ACH, credit cards, bank bill pay, and payment gateways. When payments are made, they are validated through an automated match and applied to customer balances.4


In the end, say observers, a company has a complete view of all their AR balances and payments, as well as errors and exceptions.


However, not all solutions are comprehensive. In fact, a recent analysis of vendors in the integrated AR space suggests, not surprisingly, that those who are the most technologically advanced offer solutions with the broadest functional scope.5 Some of the technologies used in these solutions include basic intelligent character recognition, robotic process automation, and advanced artificial intelligence. Additionally, some vendors offer on-premise options, while others are cloud-based.


Pros and Cons of Electronic Payment Systems


The most discussed benefits of integrated AR are reduced costs and improved key performance indicators (KPIs). Integrated B2B automated payment increases the overall productivity of invoice-to-collection teams and reduces the incidence of error and rework, both of which can lead to personnel cost savings. Faster invoicing, increased payment options, and automated application of cash can reduce Days Sales Outstanding (DSO), which benefits cash-flow management. Overall payment collection efficiency can also reduce bad debt expense and AR write-offs.


“Softer” benefits—such as better visibility into AR balances and better information for dispute resolution—can enhance customer relationships.


The most common disadvantage associated with a fully integrated AR solution is the cost and time involved to implement. A large integrated AR automated solution project can cost tens to hundreds of thousands of dollars and can take many months to implement.6 And because of its taps into different areas across an enterprise, significant effort is required from a cross-functional team of sales, IT, finance, and AR personnel.


Another high-level challenge is that the proliferation of offerings can sometimes dissuade SMEs from automating.7 Some fintechs have developed niche products targeted at only a part of the invoice-to-collection spectrum, such as transaction reconciliation or customer account analysis or cash applications. The sheer number of choices can make for an arduous decision.


At the detail level, 51 percent of B2B payments are still made by paper check, according to the 2016 AFP Electronic Payments Survey by the Association for Financial Professionals (its most recent edition of the survey, which is done every three years).8 And even in the case of electronic payments, remittance information is often sent separately from the payment itself and received at different times, requiring manual intervention.9


Current Trends in B2B Electronic Payments


Some things observers say to watch in the integrated AR space are:


  • Increased use of machine learning and artificial intelligence technologies to maximize scalability and reduce the need for human intervention
  • Implementation of code-driven compliance, especially when specific customer rules exist, such as legal and cross-border requirements
  • Automated multi-channel collection efforts, such as email, text, or phone.10


Similar to how B2B payments are changing, the way AR is processed is changing as well. This proliferation of payment options is a driver for many SMEs to upgrade and streamline their payment and collection processing. In doing so, automation might allow costs to go down, KPIs to improve, and customer relationships to be enhanced in the process. Finding the right solutions, either a la carte or through banks, can contribute to better cash flow health and competitive advantages.

Kristina Russo - The Author

The Author

Kristina Russo

Kristina Russo is a CPA and MBA with over 20 years of business experience in firms of all sizes and across several industries, including media and publishing, entertainment, retail and manufacturing.


1. “B2B Payments: The 8 Best Payment Solutions for Your Business,” Fundera;
2. “B2B Payment Trends in 2019: Big Leaps in Payment Automation,” Onyx Center Source;
3. “Accounts Receivable Automation: The Answer to the Collection Challenge,”;
4. “How FinTechs Take On Electronic Payments With Integrated Receivables”,;
5. Integrated Receivables Vendors 2018, Celent;
6. “Advantages of FinTech Accounts Receivable Automation,” Onpay Solutions;
7. SME Digital Payment Solutions: New Opportunities to Optimise, Deloitte;
8. 2016 AFP Electronic Payments Survey, Association for Financial Professionals;
9. “Driving B2B Electronic Payment Automation for Accounts Payable and Receivable,” FIS;
10. “5 FinTech Trends That Will Define Receivables Management in 2019,” Data Driven Investor;

Related Articles

Existing FX International Payments customers log in here