10 Sep Understanding the Optimisation of Australia & New Zealand B2B Payments
Commercial organisations of all sizes are under continued pressure to improve efficiency and effectiveness. Accounts Payable (A/P) and Accounts Receivable (A/R) functions, whilst not the core business of most firms, are critical to managing the cash flows that are the lifeblood of all businesses. This is especially true for business-to-business (B2B) payments, which represent the majority of commercial expenditures.
Earlier this year, Deloitte undertook a study of organisations across Australia and New Zealand to understand B2B payments and the use of card-based solutions for both A/P and A/R. This document explores the results of the survey in more detail. The study findings indicate that electronic payment methods such as card-based solutions are consistently evaluated as being better, faster and cheaper than alternative mechanisms. This is driven by business process benefits (e.g. improved cash flow, less administration, robust controls), speed improvements (due to digitisation or reduced approval steps) and cost savings (such as lower transaction or total process costs). Similarly, suppliers seeking a condensed A/R cycle as well as improved and more predictable cash flow are providing a growing acceptance base for buyers to depend on cards as one of their primary payment instruments.
The research also found that organisations are increasingly driving towards electronic means of payment as well as experimenting with different tools and providers to add value through capabilities such as data analysis and cash flow visibility. Digital solutions focused on utilising working capital benefits such as single use accounts, virtual accounts and payment platforms are displacing EFT and bridging the gap between physical purchasing cards and trade finance products.
However, whilst the use of card-based solutions is growing, significant opportunity exists to increase and optimise their use. Neither buyers nor suppliers appear to be using cards as much as they desire, in part driven by misconceptions of each other’s preferences regarding payment mechanisms.
From the results, it was also evident that organisations could benefit from advice on how to implement or optimise programs for card-based solutions. Transitioning from using cards for travel related expenses towards greater usage for B2B payments represents a significant opportunity that many organisations were not confident about how to approach. As a result, the study findings have been complemented by a manual comprised of best practice guidance on how to make the most of this opportunity.
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