A new way of transacting is sweeping the B2B payments space. Innovative digital platforms offer an unprecedented opportunity for change after decades of legacy processes, whilst opening the door to a whole new set of business benefits. As new research from Optal reveals, CFOs across multiple industries are already looking to tap the potential they offer for trimming costs and optimising productivity.
One of the benefits they’re most excited about is the potential to earn financial rewards on each supplier payment. This digital dividend could turn the traditional cost centre of B2B payments into a useful new revenue driver.
Old and new
For many companies, B2B payments are still seen as an unmovable cost of doing business. Legacy methods like cheques and BACS can add unnecessary extra cost, complexity and risk. Take cheques. Aside from the costs involved in printing, processing and posting them, there are the risks involved in items being misaddressed, going missing in the post, or being cashed fraudulently. Supplier relationships can suffer if the payment experience is consistently below par. In some sectors such as insurance, slow payment could even impact the end-customer experience; for example, if a policyholder’s car is held in a garage after repairs until funds from the insurer have cleared.
It’s no surprise, therefore, that our research found great enthusiasm for modern digital payment systems. Some 70% of businesses we surveyed say they are keen to explore opportunities for revenue generation and incentives, such as Virtual Credit Cards (VCC). In fact, delivering more revenue back to the business is the second most popular strategic payment priority (46%) for research respondents in 2020.
A new vehicle for growth
Generating an additional revenue stream is seen as one of the biggest opportunities presented by new B2B payment platforms: 64% of respondents rate the potential as significant. Why are firms so enthused? Because increasingly, budgets are being consumed by non-negotiable costs — such as those related to running legacy systems. It leaves them with less money to innovate and improve, offer shareholders returns, and/or lower prices for customers.
A zero-risk income stream such as rewards on B2B transactions could create an “innovation fund” to help organisations improve the customer experience, enhance products and services, streamline internal processes and much more. Unlike other initiatives, it wouldn’t require firms to sell more products or reduce staff count in order to generate a return. All it requires is a shift in the way they settle invoices.
It’s not all about innovation, of course. Organisations could also put their zero-risk revenue stream to other uses, including:
- Improving business margins to increase enterprise value
- Giving more value back to shareholders through increased dividends
- Providing additional rewards and incentives for staff
- Promotional activity to create more demand for products and services
It’s up to individual organisations to decide how best to spend the extra cash they could receive from B2B payment alternatives like Optal Virtual Account Numbers (VANs/Virtual Credit Cards). The bottom line is that an area of the business known for so long as a drain on resources could be reinvented as a new driver of revenue. At a time when cost pressures are squeezing many organisations, this is an opportunity not to be missed.
To find out more about Virtual Account Numbers, read Optal’s eGuide: Do You Have a VAN Plan?