The State of Affairs With Cross-border B2B Payments
Businesses that have to make or receive cross-border payments know what a challenge it can be. Cross-border B2B payments can be notoriously late, taking up to 55% longer to receive than domestic payments. This is not strange, given that most international B2B payments still use manual processes. And if you are a business using manual methods like checks to make B2B payments, you are not alone – 81% of merchants report using them to make B2B payments.
For businesses that rely on cross-border payments, delays in receiving such payments can negatively impact their cash flows, affecting day-to-day operations.
Cross-border B2B payments are still dependent on traditional banking models. But these legacy methods are slow, inefficient, and add more complexity to the process. Research shows that suppliers wait seven days more than average to receive payments from payors who use bank networks to transmit funds. Merchants also blame the lack of adequate remittance data for delays in settling cross-border B2B payments. Add to this the risks of payment fraud and data security, and you have a sizeable problem that faces most companies. On top of that, different countries have their own set of legal, regulatory, and banking hurdles that global businesses have to navigate.
Hence, businesses have to modernize their payments to improve efficiency and security in cross-border B2B payments. There are several ways to make cross-border payments faster and easier, such as using automation, supporting digital payment methods, or partnering with a global PSP. And businesses that can make and receive payments on time have an edge, especially in times when speed and convenience are on everyone’s mind.
Five Ways to Speed Up Your Cross-border B2B Payments
To make cross-border B2B payments as easy and frictionless as domestic ones, here are five steps that businesses should look at:
Digitize Your Invoicing – To speed-up cross-border payments, digitize your invoice process. Digitizing your invoices ensures they reach your payors on time and don’t get delayed, lost, or misplaced, unlike physical invoices. The faster a payor gets an invoice, the sooner they can make the payment. Adding pay-by-invoice features into your invoice will make for easier and faster payments. For a global business, this should be a top priority area.
Switch to Real-time Payments – Using international bank networks to make cross-border B2B payments leads to more delays and additional costs. Research found that suppliers in the US and the UK wait seven days more than average to receive cross-border payments coming through banking networks. Adopting real-time push payments and simplifying payment processing should be top priorities if you wish to speed-up payments to your suppliers. Thanks to innovations in open banking, real-time payments like A2A payments and Request To Pay are now a reality in Europe.
Use Automation – Automation gives you access to data and makes it more actionable. Having access to the right data at the right time can help you expedite your cross-border B2B payments. Automating accounts receivables enables you to collect payments on time and improves your cash application. Automating accounts payables ensures you pay your vendors and suppliers on time. You can also use AI to enable dynamic discounting to automate early payment discounts for your payors. Using automation gives you access to remittance data on time, ensuring faster payments.
Use Digital Wallets – Digital wallets are a quick and secure way of making cross-border B2B payments. You can use international digital wallets to make cross-border payments without additional fees or processing times. In fact, e-wallet usage is booming throughout Europe. B2B payments through e-wallets are a boon, especially for smaller merchants, as it helps them to receive payments in real-time and smoothens up their cash flow.
Work with an international PSP – Managing cross-border payments can throw up its fair share of friction. It is essential to identify the friction areas that matter to you and work with a suitable payments provider to smoothen these out. An international payment service provider (PSP) that works across different countries can help you manage your cross-border payments easily. They can offer you a single solution to streamline your cross-border B2B payments, which is much easier than setting up separate payment systems in each market you operate.
How Can Novalnet Help?
Expanding into global markets can be a complex affair. It involves dealing with separate agreements, legal and regulatory requirements, technical integrations, testing, and maintenance. A global PSP like Novalnet can help you solve the complexities arising from cross-border B2B payments.
With Novalnet’s technology, you can accept payments globally in 125+ currencies in 150+ automated country-specific payment methods. We can help you set up your payments within minutes with our instant payment plug-ins – with minimal coding required. With our AI-based risk management solutions and advanced analytics, you can design the best payment experiences for your customers, and all of it in a fully secure environment.
Speak to us to know more about different payment methods and how you can develop the best strategy to take your business global.
Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.