The top five B2B payment challenges facing large organisations

From Brexit to the Sino-US trade war and economic slowdown in the Eurozone, there’s plenty to keep CFOs awake at night. Yet few think of B2B payments as an area where there are potential gains to be made. It’s too often still viewed as a cost of doing business rather than a strategic opportunity to help grow the business.

Fortunately, this is now changing thanks to the emergence of innovative new digital payments platforms.

Payments under pressure

Let’s take a look at the key challenges facing CFOs in B2B payments, and how finance leaders can respond.

  1. Reducing human error

Human error and manual processes sit at the heart of most B2B payment headaches, adding extra cost and unnecessary complexity for finance teams. Some 29% of FTSE 350 finance leaders told us that human errors regularly occur in supplier payments, with half admitting they’ve misdirected or duplicated payments. On average, large organisations are misdirecting payments worth £3m each year. With more than half (53%) of large organisations spending more than £20m each year on B2B payments, there’s clearly an opportunity to rein in costs by minimising human error.

  • Automating reconciliations

Reconciliation is a major undertaking for large organisations, which spend an estimated average of £560,000+ on the task each per year. A lot of this money is spent on staff: on average 16 employees are dedicated to reconciliation.

Unfortunately, legacy payment systems like BACS, SWIFT and cheques make it hard to perform quick, efficient and error-free reconciliation because so little data is associated with each transaction. The answer lies in automated digital systems which include enriched payment data to streamline reconciliation.

  • Improving payments security

Another problem with current B2B payment processes is that they require the buyer to store large volumes of personal and financial payee information. It goes without saying that this data is highly sought after by cyber-criminals, and heavily regulated by PCI DSS and the GDPR. This means a potentially high risk or financial and brand damage if an organisation is breached. It’s no surprise that “keeping and maintaining details of supplier payment accounts” was one of the top-five CFO frustrations noted in our survey.

  • Making B2B payments pay

Unlike in the consumer payments sector, the B2B space has seen little in the way of incentives offered to organisations by financial institutions. In fact, 60% of those we spoke to said they receive no financial reward from their bank or credit card provider on payments they make. Not only are there no incentives, but current B2B payment systems are expensive. On top of the costs associated with admin overheads and human error are bank charges. It’s unsurprising that B2B payments are run as a cost centre.

  • Enhancing customer and supplier relationships

The impact of human error and inefficient and expensive manual processes is sometimes more serious than immediate financial risk. Supplier relationships can suffer in the long run if payments are consistently late or incorrect. In the worst case, customer satisfaction may even be impacted as a result: just think of an insurance policyholder who has to wait several days to get their car repaired while the garage waits for a cheque from the insurer.

A new approach

Fortunately, there is a way forward. Digital alternatives to legacy payment processes such as Virtual Account Numbers (VANs), offer speed, and security, whilst minimising human error through automated processes. VANs facilitate pull payments and offer an additional benefit in that there’s no need to store supplier details, reducing data breach risks. Some solutions may even offer rewards to the buyer for each transaction.

CFOs are already waking up to the potential value of these disruptive offerings. Over two-thirds (68%) of those we spoke to said they see benefit in reducing the risk of payment errors, while over half (57%) want enriched data to improve reconciliations. Nearly three-quarters (73%) said that a low-risk, low fraud way to pay like VANs would be appealing, while two-thirds (66%) said they’d like the possibility of financial rewards. An even larger number (77%) warmed to the idea that VANs could positively impact customer satisfaction thanks to faster payments and fewer disputes.

To find out more on the challenges facing CFOs today and how VANs can help to overcome them, read our report, Optimising Payments.

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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