How digital platforms can reduce B2B payment risk in your business

Every year in the UK businesses process billions of payments as part of a complex network of supply chain relationships. However, legacy payment processes are ill-equipped to keep pace with the speed, complexity and risks associated with modern commerce.

At a time of economic crisis, finance bosses must look to digital alternatives in order to better manage these risks, minimise costs and lay the foundation for business growth once the pandemic recedes.

A risky business

Businesses face three key B2B payment risks today:

Authorised push payment (APP) fraud: has long been a challenge in the consumer payments space. In fact, individuals were collectively conned out of £354 million in 2018, according to official figures. Typically, the buyer is tricked into sending money to an account under the control of the fraudster – situations increasingly common in B2B. Scammers could make such attempts appear more legitimate by hacking supplier data stored with the buyer and/or spoofing the master vendor process to convince a victim organisation that their supplier has changed its banking details. Most finance departments and outsourced finance teams simply don’t have the resources to re-validate that bank details are correct for each and every payment. Plus, third-party ID providers might be good at spotting money laundering but not ongoing checks of this kind.

The bad news is that, while consumers have been given stronger powers of redress in the event they fall victim to APP fraud, businesses are on their own.

Payment error: is also growing concern for finance chiefs. As the cost and complexity of legacy payments increases, many buyers now bundle transactions in payment runs. This means there can be multiple line items on multiple invoices covered by a single payment — multiplying the risk of an administrative error. Organisations could find themselves accidentally paying for the same thing twice, missing a payment altogether or finding the supplier doesn’t recognise a payment as they can’t pick apart the bundle.

The challenge is compounded by credit notes, which are designed to resolve issues in previous payments, or in circumstances where the supplier is also the buyer — for example a retailer selling floor space to a consumer goods manufacturer. In the latter case, costs are not billed but taken off revenue. These errors can add up to financial losses, administrative overheads and deteriorating supplier relationships.

Falling behind the competition: A final business risk relates to the ability of organisations to maintain growth by becoming more agile. By speeding up payments or making new types of payments, they can improve business models, offer new products, improve the customer/supplier experience and generally enhance competitiveness. However, legacy methods are a block on this kind of agility, adding cost, complexity and time to payments which causes businesses to lose out to their nimble competitors.

Time to go digital

Fortunately, innovative platforms exist which can help to mitigate these risks and accelerate value for organisations. Virtual card numbers are single-issue 16-digit numbers that can be used to pay suppliers in a seamless, low-risk way. They operate by the pull payment method, avoiding the problems of APP fraud, and can also be enriched with additional invoice data to ensure suppliers know exactly what they are being paid for. Reconciliation is therefore automatic and immediate and payment is faster and cheaper than legacy methods.

With automated digital payment systems like this in place, finance teams can minimise administrative overheads and human error, as well as security and fraud risks, and help their organisation become more nimble and competitive all-round. It could be the difference between success and failure at a time when most businesses are under extreme financial strain.

To find out more, read our eGuide Do You Have a VAN Plan.


Contact details:

Bradley Eccleshare
Chief Marketing Officer

M +44 0 7525 929198
T +44 0 20 3892 4928

About Optal Ltd

Optal is re-inventing how payment processes work across complex industries. By stripping payment processes of their customary inefficiency, Optal helps companies boost profitability across a growing number of sectors around the world.

Optal issues Mastercard branded payment products, driving its focus on developing and bringing to market, game-changing payment solutions. Optal’s working capital solution, Invapay, turns underutilised credit lines into a dynamic resource to manage cashflow.

“Invapay” and “Invapay solution” means Invapay Payment Solutions Limited, a private limited company in England and Wales, authorised and regulated as an Authorised Payment Institution by the Financial Conduct Authority under the Payment Services Regulations 2017 which is a wholly-owned subsidiary of Optal Limited.

Talk to us to discover how Optal can add value to your organisation.

General Enquiries: +44 (0)2038 924 928
Invapay Technical Support: +44 (0)3308 387 490

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