For decades, business-to-business (B2B) commerce has relied on a broad array of organizations, such as trading partners and third-party payment and reconciliation facilitators, to complete any given purchase of goods and services. These organizations have been stitched loosely together by postal mail, telephones, computers and email, as depicted in Figure 1.
Figure 1. Illustrative Elements of a Traditional Paper-Based Payments Transaction
Historically, innovations have automated selected components of the above transaction process, but not necessarily allowed for process convergence. For example:
- Distributed walking plastic purchasing cards automate step 3 for buyers and suppliers. However, the related transaction may still rely on completion of the other steps. As a time-saving feature, purchasing cards have been promoted as a way to avoid steps 2 and 4 above—by presenting a card for payment at the outset of step 2 when goods or services are received. Many buying organizations have, therefore, been reluctant to allow purchasing cards for transactions above a few thousand dollars (in other words, transaction limits).
- ePayables solutions (also known as virtual cards) have progressed further than purchasing cards as providers have supported directly, or through implemented integrations, automation of steps 2 through 5 above. However, the purchasing process has often been decoupled from payments, resulting in what can be a very manual and intensive supplier enablement campaign process. Furthermore, while ePayables integration for buyers can often dramatically reduce process time and cost, ePayables often present a manual payment acceptance process for suppliers—due in part to the proliferation of disparate, non-compatible ePayables solutions.
eCommerce marketplace portals are widely available and have been used many years for business-to-consumer transactions. Consider holiday shopping, for instance. Traditionally, one would go to a local mall or the outlets to find items for gift-giving. In recent years, many consumers have opted instead to complete some or most of their holiday shopping on the web through an eCommerce portal with access to an array of categories of new or used merchandise.
As with so many other aspects of commerce, the consumer experience is leading to greater adoption and efficiencies for buyers and suppliers conducting B2B commerce. Through various eCommerce portal alternatives, connectivity with the requisition process can be improved and all of steps 1 through 5 may be converged and automated. Critical aspects, such as trading terms and forms of payment, may be determined upfront and, thereby, automated for any given transaction. Recent announcements by various eCommerce portals have included features that facilitate buyer and supplier reporting and reconciliations.
Over time, these portals appear to be well-positioned to serve a greater portion of B2B trading activities.
Also published in the NAPCP TransAct! newsletter