Why your business needs a payments alternative

B2B payments may historically not have set many pulses racing in the technology world. Yes, anyone who has worked at the business end of a finance department knows that existing payment processes are saddled with cost, complexity and human error. But what’s the alternative? Until now, unlike the innovation we’ve seen in the consumer payments space, there has been little to get excited about.

Fortunately, that is changing. Digital alternatives offer a low risk, low cost way to pay suppliers that preserves key relationships and supports business agility. They’re also set to receive a boost as organisations everywhere look to shave what they can off existing business costs to weather the current pandemic and economic crisis.

Legacy is dead

Legacy payment methods like BACS or cheques have been with us for so long, they’re simply viewed by most CFOs as a cost of doing business. Yet they’re a block on innovation and growth. Bank charges, administrative overheads and human error all combine to eat into margins and sometimes imperil key supply chain relationships which can ultimately impact the end customer experience.

We calculated that, on average, FTSE 350 organisations misdirect payments worth £3m each year, while a massive £40 billion is paid late. That’s not to mention the extra risk of data breaches and payment fraud that these traditional B2B payment systems expose typical organisations to.

Long live digital

Modern CFOs need an alternative. But technology for technology’s sake won’t do. It needs to fit a specific set of requirements which we have defined as:

  • Creating options without disruption: emerging technologies like blockchain and AI promise much, but may require drastic organisational change to implement. And even then, their operational value is not proven. Payments alternatives need to deliver now on their promise
  • Delivering efficiency without complexity: digital payments must be capable of slotting neatly into existing infrastructure, without the need for a radical overhaul of current systems
  • Providing benefits across the supply chain: as mentioned, they have to appeal to all businesses in the broader payments ecosystem
  • Supporting assurance and control: CFOs are understandably wary of handing over core payments processes to third-party companies. That’s why any alternatives must be transparent, fully compliant with relevant laws, and offer a high degree of control for the customer

Payments at the speed of business

Whether you pay suppliers by credit card, BACS or cheques, there are always significant downsides. Cheques are familiar but costly and time-consuming. Bank transfers are quicker but still create problems around reconciliation, fraud and setting-up new suppliers. Cards extend days payable outstanding but are also susceptible to fraud and add admin overheads. None tick all of the above boxes.

Virtual Account Numbers (VANs) are different. These 16-digit, single-use virtual card numbers can be used to pay suppliers quickly and easily. They allow buy-side finance teams to add extra data to each digital transaction, streamlining reconciliation and reducing the risk of fraud. They also operate via pull payments, so the buying organisation doesn’t need to store payee details. This not only reduces the risks associated with potential data breaches, but also means there’s no administrative barrier to setting up new or one-off suppliers. There’s even an opportunity to gain rewards on each transaction.

B2B payments are long overdue a refresh. And the current economic crisis could be the push the industry needs to embrace digital platforms en masse. With solutions like VANs, CFOs can step-up at a time of extreme financial strain and start driving value for the organisation, one payment at a time.

To find out more, read our latest eGuide: The need for payment alternatives is now.

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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