The migration of businesses to online payment tools has accelerated over the past year, but that doesn’t mean they’re ready to completely abandon the B2B payment methods they’ve used for decades. Paper checks still occupy an important place in the B2B and even consumer-to-business (C2B) payment cycle for a significant number of companies, Katherine weislogel, responsible for treasury and payment solutions for Synovus Bank, PYMNTS said in a recent interview. It is essential for corporate banks to ensure that businesses understand and are prepared for digitization, she continued, but these financial institutions (FIs) also need to be aware that businesses will rarely give up paper entirely.

“There are early adopters… who come out of the paper, but there are those who just sit and watch,” she said. “And like these [electronic payment] tools are becoming more and more available, it’s really my team’s job to make sure we show our clients that way. But there are still some who want to keep this paper, and until they see the benefit and the value [of other methods], they are not ready to give up.

Banks should strive to offer B2B payment solutions that take paper checks into account, creating a reasonable path for future digitization. FIs should seek to meet the payment needs of businesses where they are now, especially as the full digitization of B2B payments is still not within the reach of many businesses.

Surviving the payment digitization boom in 2020

Businesses of all sizes and across industries can struggle to upgrade their payment processes to digital methods. There are still companies operating on infrastructure so outdated that they cannot perform automated clearing house (ACH) transfers, Weislogel said, and many companies still have time to manage check payments as part of the process. of their typical AR and AP processes. She explained that a large number of companies are still not convinced of the potential benefits of electronic payment methods, while others have built decades-old relationships with customers or suppliers who revolve around the sending. or receiving paper checks. This can create challenges for these companies as they aim to innovate their B2B payment processes.

“Sometimes they are in their own way,” she admitted. “If you look at some of these back offices, the tenure of their employees who post paper payments can be 30, 40 years. We see that all the time. They only know what they know and they don’t want to change their practices, and the AR manager doesn’t want to jostle them because these people have always been there. They know the customers; they know everything.

It will be imperative for businesses to find tools and solutions that can remove the sticking points surrounding the use of checks rather than simply replacing the method outright, as paper checks are sure to survive the most recent boom in digitization. . Synovus Bank recently announced a partnership with a third-party vendor to create same-day processing support within the banks’ AR solution that can alleviate some of the costs and complexities of these payments, Weislogel said. Solutions like this can help speed up payments based on paper checks while giving businesses a little push towards digitization, which will be more and more necessary as manual processes become longer and more expensive. .

“The more you touch the paper, the slower the process and the more expensive it is,” Weislogel said. “It’s just a fact – as these customers come out of the pandemic, they are feeling this [need for] hypergrowth, and they all feel it between technological efficiency and labor problems, [so] they cry for these conversations and ideas and solutions [we] brought them.

Adding same-day processing and other solutions that can speed up paper check payments while reducing processing costs is the first step in ensuring businesses have a clear path to digitizing payments. Banks and businesses should also take note of other emerging technologies and payment methods that could play a key role in B2B payment in the future, now that the path to electronic payments is open.

The path to real-time payments

Another development that businesses need to watch carefully is the expansion of real-time payment networks. Weislogel said The Clearing House (TCH) and the U.S. Federal Reserve are in various stages of building networks to support these payments. The latter’s network is expected to launch in 2023 while TCH’s has been online for some time. Businesses are likely to have higher expectations for faster and more transparent payments as these networks grow.

“The other big thing… going down fast and furiously [and] had helped solve some of these issues, it was real-time payments, ”she said. “So customers will increasingly turn to Zelles, Venmos, real-time payments at all levels to solve these solutions. “

Staying on top of the evolution of payments in the rapidly changing B2B space will be essential for businesses and their banks. It’s important to ensure that businesses can meet the payment expectations of their customers and customers, which will eventually require them to give up much of their hold on paper checks, but they don’t need to give it up. completely for now.



About the study: The AI ​​In Focus: The Bank Technology Roadmap is a research and interview-based report examining how banks are using artificial intelligence and other advanced IT systems to improve credit risk management and other aspects of their operations. The Playbook is based on a survey of 100 banking executives and is part of a larger series assessing the potential of AI in finance, healthcare, and other industries.

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