How Companies Can Use Automation to Face Cross-Border B2B Payment Challenges

The order-to-cash (O2C) process is inherently complex. Companies must smoothly manage everything from initial orders and invoicing to product delivery and the notification of payment receipts to complete it, making it a long and cumbersome procedure with a great deal of room for error. This is especially true for the 80 percent of companies that still manually manage their O2C processes and rely upon human employees to move money fast.

These O2C challenges are only compounded for businesses that conduct cross-border B2B payments, as these firms must manage shifting foreign exchange (FX) rates, varying international regulations and other variables to ensure that orders, invoices and payments are accurate.

The pandemic is also creating frictions and making it more difficult for companies to make manual payments — even to businesses in the same market. One study showed that firms still using manual tools are finding it harder to identify and collect outstanding payments, for example. These firms take 67 percent longer to follow up on overdue payments than those that have implemented automation and other emerging technologies.

The pandemic is reshaping the cross-border B2B payments world, so international businesses must seek frictionless solutions that add transparency and efficiency to their O2C processes or risk being left behind.

The following Deep Dive analyzes how the O2C process has changed recently, how the health crisis is accelerating these changes, and why automation and other tools are becoming key to smoothly managing both domestic and cross-border B2B payments.

O2C And The Data Problem

Firms making domestic and international B2B payments are facing many of the same challenges as they work to craft seamless O2C processes, and the primary issue is information management. They must collect, categorize and verify vast amounts of data each step of the way, and this information must then be shared among the departments and systems that firms use to track orders, complete invoices and request payments. One study found that 24 percent of B2B companies operate siloed O2C processes, meaning each system is responsible for only one step and remains unconnected to others.

Companies also must handle the sheer volume of data that now accompanies each order. Achieving this manually or with outdated technologies is becoming nearly impossible, as wading through complex piles of paperwork only extends payment cycles. One study found that approximately 15 percent of B2B receivable payments are late, for example.

The growing amount of data also increases the likelihood that employees will make errors or omit critical information to firms’ financial detriment. A report found that order entry errors alone can harm firms’ profitability, with 74 percent of manufacturers and 81 percent of distributors saying that these issues can decrease their profitability by up to 25 percent. Additionally, manual data-entry mistakes occur daily for 7 percent of B2B companies.

B2B firms, including those operating globally, can ill afford costly data entry errors as the pandemic batters their revenues. These firms are thus seeking tools to help them process information swiftly and accurately, with many examining the benefits of emerging technologies such as automation.

Automation’s Expanding Role In The O2C Process

Automation is taking center stage as businesses look to square their outdated O2C processes with their clients’ expanding digital demands during the pandemic. One study found that 60 percent of firms are planning to automate at least some of their accounts receivable (AR) processes to reduce their costs, for example. Another report found that implementing automation of some kind could save companies approximately $5 to $15 per sales order, which could be particularly beneficial to those managing thousands of orders per month across different markets.

Integrating automation into overall O2C processes could also give companies significant advantages over their competitors, especially when it comes to categorizing and interpreting the growing amounts of data that firms must collect. Another study found that just 10 percent of organizations are using automated tools to assess their data, for example, revealing that many have yet to tap into automation’s potential.

Numerous technologies can help businesses make better sense of their order information and approach their O2C processes more holistically, which could be a key advantage to helping them operate in an increasingly digital global commerce landscape. Failing to adapt to firms’ shifting O2C and cross-border B2B payment needs could result in these firms losing their competitive edges, however. Businesses must therefore approach O2C innovation strategically to stay in the game.