Six Challenges for B2B Payment Processing and How to Handle Them

A decade ago it began to feel as though new technologies were being introduced almost as fast as the speed of light. Today, it is beginning to feel as though the speed of light is moving almost as fast as new technology.

For centuries, technology lagged behind business needs. The challenge was finding ways to meet those needs, and digital technologies are now advancing so rapidly that they are outpacing the perceived needs. Developers are finding answers to questions before the questions are even asked.

This can be particularly discomforting for businesses. When strategic plans and even annual business plans do not include the potential of implementing new technologies because the planners are unaware of those new technologies or their impending introduction, the technologies can become disruptive.

Visionaries get most of the press, but business leadership is still about having and managing a plan. When a new technology is introduced, leadership must ask, “Does it fit our plan?”

Most likely, a new technology like B2B payment processing does not fit the old business plan. The next question must be, “Is this beneficial enough that we should modify our plan?” Assuming that answer is in the affirmative, the ultimate question must be asked: “What will it cost?” This question is the ultimate obstacle because it exposes the potential magnitude of disruption.

The Opportunity for B2B Payment Processing Is Expanding

A report published by Deloitte projects the potential for B2B payments overall to increase from $16.5 trillion to $23.1 trillion by 2020. However, the significant factor is that Deloitte analysts predict a 10.3 percent CAGR in B2B e-commerce while all other methods of B2B payments and processing will grow by only 5.8 percent.

Still, B2B e-commerce and payments are expected to comprise only one-tenth of the overall market ($2.77 trillion of the $23.1 trillion). The trend is obvious, but the dollar portion of conversion to new B2B e-commerce clearly indicates challenges for adoption exist.

The Obstacles for B2B Payment Processing

Attitude

There is no single obstacle for businesses, but there are some that are common. The leading obstacle, the context in which several others may be nested, may be attitude, or corporate culture. Harvard Business Review defined three prevailing attitudes toward business adoption of new technologies in general.

Two-thirds are slow to adopt new technology because of some level of skepticism about being a pioneer. Although pioneers typically gain a competitive edge, the others consider that competitive edge to be temporary. Furthermore, they understand that the pioneers also expose themselves to the dangers of unintended consequences.

Attitude is a challenge that needs to be overcome, but it is unlikely, aside from regulation, that all businesses will ever be early adopters.

Legacy Systems

Legacy systems can present a three-fold challenge.

1. Our system is not compatible.
2. It will cost too much to change.
3. We are comfortable with the way we do business now.

Depending on attitude, awareness, and perception, some or all of those statements may or may not be true.

Security Issues

The only real difference between those the Harvard Business Review coined as followers and cautious – as opposed to the pioneers – is security. Followers will get on board when they realize a substantial benefit. The cautious will wait until they are certain that the rewards outweigh the risks.

Transparency

We are well aware of the lack of visibility of digital transactions as consumers. The ability to know the status of a transaction at any given time is paramount for businesses to control cash flow. There is too much at risk to not be able to account for any element of any business process in the moment. It is not just the need to know. It is the need to know now.

Uniform Processing

Closely related to legacy systems, the current multiplicity of file formats being used can make adoption of any new B2B payment technology difficult, particularly with respect to the reconciliation of payments and invoices. While this may not be considered a risk per se, it may be a serious consideration in terms of trade-offs. Why trade a headache for an upset stomach?

Lagging Back-Office Technology

All too often, the back office is the cake that supports the colorful icing of the Sales and Marketing departments. The presentation of the cake is almost entirely dependent upon the icing. Therefore, the icing gets most of the attention. This is especially true during the business planning process.

Overcoming the Obstacles of Digital Payment Processing

Despite the six obstacles we have noted, they may all be rolled up into one: Indecision.

Successful businesses weigh risk versus reward, investment versus return, important versus urgent, and necessary versus nice.

The obstacles are not really obstacles at all, but they are challenges. They are similar to the challenges every business executive faces every day. Perhapsthe secret to handling the challenges of converting B2B payment processing to electronic is in recognizing that the challenges do not necessarily signify resistance. Acceptance of the concept is one thing. Adoption is another.

The virtue of patience will evidence itself when attempting to convert the followers and the cautious. They will respond to that evidence when they are certain that their concerns have been adequately addressed.  The sooner those concerns are adequately addressed, the sooner all businesses will become adopters.