The shockwaves of the COVID-19 pandemic still persist today, making it clear what small businesses need to focus on in 2022. While there is no crystal ball to tell us exactly what we can expect, there are a few B2B payment trends that we can safely assume will be prevalent for years to come.
As we are coming off the tail end of a few turbulent years, the defining themes for B2B payments in 2022 are predicted to be:
- Digital transformation
- Transition from checks to virtual cards
- Capitalization of eCommerce
- AP/AR automation
- Heightened payment security protocols
Keep reading as we’ll uncover each B2B payment trend and what that means for small to mid-sized businesses in 2022.
The quickest way for small businesses to be left behind is by failing to digitalize accounts payable (AP) and accounts receivable (AR) processes. While the progression of online B2B payments has been steadily increasing, the trend was catapulted due to the COVID-19 pandemic.
Moreover, after making the change to digital commerce forums, most buyers and suppliers prefer this new payment option. In fact, 64% of organizations have already shifted away from physical invoices. Additionally, 60% of firms are preparing to automate their AR systems to unlock potential cost savings.
Therefore, businesses that neglect this wave of digital transformation will fall short of customer expectations and operational efficiencies. To stay relevant, they must cut ties with outdated payment methods for more reliable and secure electronic options such as Automated Clearing House (ACH).
Transition from Checks to Virtual Cards
Although the usage of online B2B payments is growing, it is rare to find a business that has digitalized completely. Research shows 97% of companies still pay at least some of their primary business suppliers by check. It is presumed that CFOs and CEOs still want to physically sign off on paper checks rather than online payments.
However, paper checks are more costly, time-consuming, and have a higher risk of fraud. Therefore, we predict as consumer demands for digital transactions rise, the usage and acceptance of virtual cards will follow.
For those unfamiliar, virtual cards are single-use “cards” with unique credit card numbers generated by AP departments to their suppliers. Once an invoice is approved for payment, the customer’s virtual card platform automatically sends the randomly generated card number to the supplier for the exact payment amount.
They have started to gain traction in the B2B payment world because they allow the buyer to maintain authority, flexibility, and security when making transactions. Additionally, virtual cards pay suppliers at a quicker rate compared to other traditional payment options. It’s a win-win.
Capitalization of eCommerce
According to American Express, millennials make up 70% of all B2B decision-makers. Therefore, it’s important to exceed their payment expectations when selling any product or service.
How can small businesses offer a seamless customer experience to capture the attention of millennials? By providing quality e-commerce capabilities.
Recent studies show businesses implementing e-commerce offerings expect to see 5x faster revenue growth than previous levels. It is likely because millennial buyers are more comfortable shopping online compared to in-person.
Additionally, millennials preferred shopping method is via mobile. Therefore, online checkout experiences must be optimized for any device. Here is where I see the most significant opportunity for B2B payment trends in 2022.
A substantial majority of retailers do not offer mobile payment options (88%). If your organization is in the minority of eCommerce sellers with mobile payment capabilities, you will score big with the most valuable demographic.
According to the B2B Payments Innovation Readiness Report, businesses that rely on manual processes take 67% more time on average than companies that use automated AR processes to follow up on overdue payments. Therefore, if your goal is to improve cash flow and streamline operations in 2022, I encourage you to replace any manual payment processes.
For example, requiring printed and physically signed paper checks can add difficulties to the accounts payable system. As a result, payments take longer to process. Instead, swap out paper payment methods for easier and faster digital alternatives. You’ll achieve faster payment processing, higher efficiencies, and lower operational costs.
Heightened Payment Security Protocols
Did you know, 80% of organizations report being targets of a payment fraud attack? Leading the pack of B2B payment fraud is through paper checks.
However, despite the high incidence of security breaches and the expensive costs involved, checks are still the most common B2B business payment type. If your business is still issuing a large number of paper checks, I encourage you to reconsider that practice in 2022.
Herein lies the added benefits of using virtual cards over paper invoices or traditional credit cards. Virtual cards are less susceptible to fraud and data breaches because of their one-time use and strict protocols.
Here are a few statistics and examples that showcase how B2B companies have already taken strides to heighten payment security protocols:
- 87% of B2B businesses have implemented additional blocks on accounts. (Association for Financial Professionals)
- 83% of organizations conducted more frequent reconciliations in 2021. (Association for Financial Professionals)
- 81% of companies added extra segregation of duties. (Association for Financial Professionals)
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