Craig O’Neill, CEO of VersaPay, says that a new age of commerce is emerging in light of the digital transformation in the last year. He believes that the ability of businesses’ systems and people to work together online — what he calls the two faces of collaborative commerce — is key to navigating this new economy. Read more in this excerpt from The Connected Economy’s Power Source – CEO Edition.
We’ve all experienced a sea change this past year. The ways we work, spend our leisure time, interact with our family and friends, and transact for goods and services have all changed dramatically. Looking back over the year, I’m amazed by how well technology has enabled us to make this shift, and I shudder to think about what life would have looked like were it not for the technologies that connect us.
The same has been true for most businesses. Workforces are working from home, and teams within and across companies are collaborating online. Again, the technologies that connect us have made this possible. There have been exceptions, however. Where physical labor is involved in producing goods and services, working remotely is of course not possible, but there’s another notable exception where physical production is not involved: the billing and payment processes between businesses. These processes have traditionally been firmly tethered to the office because checks are still so prevalent in business-to-business transactions. Finance leaders everywhere now know this needs to change.
As businesses embrace digitization to thrive in a remote world, a new age of commerce is emerging. Increasingly, organizations will transact with one another in an alldigital way. No more paper invoices or statements. No more checks. No more cash. No more physical credit cards. Billing information, payment instructions and remittance data will all flow electronically and seamlessly between vendors’ systems and buyers’ systems, with people intervening only when there are problems to be addressed. And those people can be in the office or working remotely.
A major factor in making this transition to the digital economy will be how well businesses’ systems and people can work together online. We call this the two faces of collaborative commerce. Systems must be able to interact about orders, pricing, promotions, invoices, credit notes, payments, remittance information and more. And systems must facilitate people interacting when there are issues to resolve, like a pricing discrepancy or damaged goods. There will always be reasons for people to collaborate to solve problems, and systems must support this collaboration.
At the heart of all this is payments. If checks have tethered AR and AP teams to the office, the elimination of checks must occur to enable remote work. Easier said than done. Until digital payments get smarter – and are able to carry business information to explain to the payee how to account for the cash received – it will be slow-going, even with the added motivation provided by the pandemic.
The good news is that digital payments are getting smarter fast. Increasingly, AR and AP systems, payment networks and virtual card platforms are paying more attention to carrying remittance information along with the payment. The pandemic has created a sense of urgency to move all-digital, and progress has accelerated accordingly — some estimates claim by as much as 10 years. It’s safe to say that B2B transactions, with smart digital payments at their core, will look vastly different over the next few years.
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