Pandemic’s Pressure Points Highlight B2B Payments Vertical Needs
B2B’s pain points when it comes to payments are well known — where paper checks dominate, where even the fax machine makes an appearance.
But in a panel discussion with Mike Massaro, CEO of Flywire, four executives from various verticals — from freight management to banking — discussed how pressure points are spurring a shift to digital processes. Along the way, they said, the B2B payments landscape itself will be transformed, chiefly through digitalization and verticalization.
Panelists included Ariel Cohen, CEO of travel management firm TripActions; Bob Youakim, CEO of Passport, which focuses on transportation management software; Chris Ward, head of Products and Innovation, Treasury Management at PNC; and Sunil Sharma, chief technology officer and chief product officer at freight management firm Cargomatic.
Eliminating paper is a high-level goal across each of the firms’ client bases, said the panelists.
Points Of Pressure
Youakim, whose firm offers an operating system that enables cities to manage mobile pay parking, digital permitting, ticketing and other forms of vehicle management (facilitating connections between municipalities and residents), said “cities are dealing with a lot right now. Our priority is helping them manage through this recovery in a way that addresses not just the health risks that we’re all facing, but the economic crisis, as well as the social crisis.”
In the immediate impact of the pandemic, he said, the company lost about 90 percent of its transaction volumes in about a week — but a rebound has taken place as more vehicles are out on the road making eCommerce and food deliveries.
TripActions is focused on travel management, Cohen said, and also was hit hard as travel came to a standstill. But there has also been demand for TripAction’s other offerings as companies must reckon with the ways in which they handle expense management.
“I’ve never met the person that liked to reconcile expenses,” he said, tongue in cheek.
He noted that with far flung, distributed workforces, monitoring and approving spend has become more critical than ever, and TripActions recently debuted a digital payment solution — credit products attached to expense management solutions via its Liquid payment card — that asks for verification when employees use corporate cards to make purchases.
Elsewhere, he said, TripActions has provided what he termed a “unified dashboard” of firms’ expenses on everything from software to entertainment — with real-time visibility.
“If you think about employees working from home, you as a CFO, as a finance team, you can find yourself with a lot of surprises two months down the road,” said Cohen.
With an eye on the freight management space, said Cargomatic’s Sharma, the pandemic shone a spotlight on some of the inefficiencies inherent in that vertical.
He noted that 90 percent of the trucks on the road are part of small fleets of six trucks or fewer. On the other side of the equation, the small businesses and shippers that need to get goods from point A to point B number in the thousands.
All of those interactions include agreements between these small companies — with paper invoices flowing between them.
Those paper communications, Sharma said, span invoices, proof of delivery documents and approval forms. Moving a container from seaport to distribution center involves collaboration and coordination between half a dozen entities and dozens of interactions. Costs can be unpredictable, too, he said, so better insight into cash flow management is key to all stakeholders.
“There’s complexity and inefficiency in the whole process,” Sharma told the panel.
Online marketplaces such as are on offer by Cargomatic were already saving users time and money before the pandemic by streamlining interactions, but touchless features including billing and payment have been increasingly essential to transportation businesses.
With a bank-level view that cuts across several sectors, PNC’s Ward said the pandemic, similar to 9/11 is “another monumental event that will drive the shift to electronic payments.” CFOs and treasurers will, increasingly, see that they need to eliminate the dependencies on paper forms of payment and transactions.
Where We’re Headed
As reopenings become the norm, we’ll likely see some new business models emerge, predicted panelists.
Green shoots are starting to form across corporate card spend and in the travel and entertainment (T&E) space, said Ward, and there will be some hybrid models of work-from-home/on-site employment that will take shape after the pandemic, adding that “there’s a lot of magic that can happen with face-to-face meetings.”
TripAction’s Cohen stated that, eventually, in-person interactions will come back, noting that people still need human contact and connectivity. Traditional economy companies, said Youakim, will likely find a way to operate as they had before, bringing offices back to full capacity, but other firms will embrace hybrid models.
“The way we think about the office space is going to change,” he said.
Interconnectivity And Embedded Finance
But beyond the hybrid models of work from home and on-site activities, within the B2B context, Ward said PNC (and other banks) are accelerating their investments in digital channels to help their corporate customers embrace digital onboarding activities, making it easier to initiate transactions using application programming interfaces (APIs).
By way of example, he said, “we’ve had one corporate customer that has gone from wanting to do electronic payments to being live in less than five weeks, self-servicing themselves using APIs to initiate real-time transactions.”
That self-servicing component has been critical as we move to what Ward termed “an immediate economy” where we’ve, as consumers, gotten used to ordering from Instacart and conducting business across mobile devices. At a basic level, he said, there will always be a need for bank services that meet corporate needs — ensuring liquidity, fraud protection and compliance.
“Business transactions are happening in real time, and things are interconnected,” he said.
Passport’s Youakim echoed the sentiment that APIs are able to “open up infrastructure” and take away complexity that can hinder connections between B2B activities. In one example, Passport said in September that it has entered a collaboration with Google to offer mobile parking payments through Google Maps.
As integrated payments are gaining ground, players who provide the software and products tied to embedded finance must, as Youakim put it, adapt in a way that is going to serve the future.
“Are you going to invest in that, or are you going to continue to hold on to what your profit center/core has been all this time?” he asked.