Consumer payments could hardly be easier. They’re seamless, they’re instant, and they’re available pretty much everywhere — in-store, online, even in cars.
As much as business-to-business payments are trying to catch up, the added complexity of commercial transactions makes the process that much more difficult to resolve.
Tinvio Chief Executive Ajay Gopal told PYMNTS that compared to what we experience in our daily lives, B2B payments are a fragmented and multi-tiered process that involves multiple mediums, including checks, bank transfers, cash, and numerous extra steps that must be taken before you can even get to that point.
“You have the approvals process, the terms of the invoice, and then you have to reconcile that invoice with the order it’s related to,” Gopal said. “It’s a very complex transaction and there are a lot of ways to think about fixing them. B2B is a vast universe and I don’t think there’s going to be one solution that fits all.”
What’s more likely to emerge, Gopal believes, will be a number of highly targeted B2B payment solutions that solve some very specific use cases. The emergence of those solutions is likely still some way off, but they promise to make life much easier for businesses when they do arrive.
Gopal said perhaps the biggest impact of the consumerization of B2B payments will be on the reconciliation process. One of the challenges for businesses today with their existing, fragmented payments ecosystems is they have to devote a lot of time and energy to determine which check is tied to which invoice. Then they have to work out which quarter it pertains to and how it ties in with their depleted inventory. It’s an exhausting job that often requires several full-time employees.
As B2B payments evolve to become more like the consumer world, Gopal thinks that’ll no longer be the case.
“That entire process of collection and reconciliation is going to become almost magical from a user experience perspective,” Gopal said. “So, from a staffing perspective, you’ll no longer need four or five different people sitting at the back of the office trying to figure out where did this money come from and what does it reconcile against.”
What will continue to persist, however, is the incredibly complex nature of B2B transactions, where the process is almost always completely different for each customer.
Gopal explained that in the case of consumers shopping on a website such as Amazon or Shopify the steps involved are pretty much always identical.
“The purchase transaction behavior is always the same. First you add to cart, go to the checkout, click the credit card option or another payment option. Then you fill in your delivery address,” Gopal explained. “Its standard for everyone. There’s no negotiation of how I want to conduct that transaction.”
Not so in the world of B2B. The bulk of business dealings are a much more involved, bespoke process where the supplier is forced to bend to the whims of the customer because the volume of the sale is so high, Gopal said.
“There is a lot of customization that goes into that relationship and it’s super-nuanced. So I can see your catalog, but I want to negotiate pricing of this item. I could want to [set] terms on these items and have them delivered in 30 days, and different terms on another set of items to be delivered in 90 days,” he explained.
In the consumer world this doesn’t happen, but in B2B the seller is almost always forced to accommodate the buyer’s requests. Gopal said he doesn’t really see that relationship changing.
“That level of customization will always remain because the value of the relationship is so high,” Gopal said. “But that’s where startups also have an opportunity to go in and say, ‘Hey, complex is not a problem,’ and go and create user experiences that simplify that kind of complexity.”