The $38 Trillion Payment Market That No One is Talking About

Some things take their own time but even here efficiency is paramount.

Flint Lane

CEO of Billtrust

The $38 Trillion Payment Market That No One is Talking About

You've probably noticed that the way we pay each other is changing – today,

we have many more options. We can go to a group dinner and use a mobile app like Venmo 

to split the check almost effortlessly. Or we can head to a local Starbucks and use our smartphones and Apple Pay to purchase a latte without ever taking out our wallets.

And most of us have probably long forgotten the days of paper paychecks!

My favorite recent innovation is the convenience of depositing checks via the PNC app

on my smartphone. No more trips to the bank!

Services like these are transforming the way we think about consumer payments –

they’re bringing speed and convenience to transactions in ways previously unimagined.  

As with any new technology, there are some risks, but it’s clear that consumers are changing

their payment habits and going electronic. Back in the 90's, roughly 25 percent of consumer bill payments were electronic but today, over 75 percent happen electronically.

But that is not yet the case in the business-to-business (B2B) payments space.

Of the estimated 170 billion invoices exchanged by global business 

and government sectors in 2014, a mere 26 billion were sent electronically. 

That’s just 15 percent, a whopping 60 percent less 

than the fast growing metrics in the rest of the payments universe.

This is a huge deal. Estimated to be $38 trillion dollars in payments volume –

B2B transactions represent the largest unrealized opportunity to drive efficiency in the payments space and they’ve gone largely unexamined because the invoicing process is so complicated.

Not that long ago, the invoicing process was straight-forward – buyers of goods and services received paper invoices through the mail and sent back a payment by paper check.

But customers don’t want just paper invoices any more. Just like in the consumer space,

business customer demands are changing. Some want e-mail bills, some want EDI,

some want to visit a biller’s web site, some want direct feeds into their Accounts Payable systems.  This is why B2B is slower to adopt electronic channels - it’s really hard to solve

for all of these different delivery choices.  And this is just half the problem.

Each of those invoices is going to be paid (hopefully) via numerous channels as well.

We believe that we are on the brink of a major change in B2B billing and payments.

Our company, Billtrust, conducted a survey among business decision makers earlier this year

and found that 75 percent plan to expand electronic invoicing and payment

over the next 12 months. When you consider how electronic payments

have begun to infiltrate the consumer spaces,

this electronic adoption is likely to have a huge impact on the B2B payment universe.

Here’s a few ways companies can benefit from this electronic leap:

1. Get paid faster
By integrating and automating the disparate systems of invoicing to one, cloud-based solution, companies can achieve real efficiency gains. We’ve found that going digital

means you can encourage customers to pay you electronically – 

which means faster transfers of money and you can keep better track of payments –

which means less lag time in your Accounts Receivable (A/R) collection

and ultimately lower Days Sales Outstanding (DSO) metrics. That’s real cash back in the door!

2. Reduce costs
For vendors, the benefits of going electronic include eliminating the expenses

associated with producing and mailing paper invoices: think postage stamps and paper costs.

We’ve found that most businesses save 75 percent on billing costs

by switching their customers from paper to online. Seems like a no brainer!

3. Meet a variety of complex buyer needs and improve customer satisfaction
Having an electronic solution allows you to be flexible and organized,

meaning you can tailor the invoicing process to each of your unique client’s preferences.

It also allows you to offer your customers on-demand access to information

about their payments and records. Together these result in more satisfying experiences

for your customers. Most of our clients report double digit reduction in calls to call centers

and higher customer satisfaction among paperless customers,

further suggesting that there is a strong correlation 

between electronic adoption and customer experience.

Imagine what a better customer experience could mean for your business!

There is a bright future in the business payments space.

As companies begin to realize the benefits of integration and automation,

I expect to see major transformations in the way business is transacted.

Similar to the changes we’ve seen in the consumer payments space,

business transactions are about to get a whole lot more efficient, convenient and manageable.

Bring on the next era of easy payments! 

https://www.linkedin.com/pulse/38-trillion-payment-market-one-talking-flint-lane

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