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How B2B Finance Departments Increase Efficiency with Outsourcing

Topics: Finance, Management

B2C businesses don't have the common B2B problem of being paid on credit. Consumers swipe their credit cards and money is immediately deposited into the merchant's account, minus a small fee. This payment experience is far from what most B2Bs go through when collecting payments. Since B2B customers pay on credit, B2Bs must wait 30 to 90 days to be paid. Worst of all, a good percentage of those customers pay late.

The 'Payment Practices Barometer - The Americas 2016' report created by Atradius found that a whopping 93% of respondents said B2B customers pay late. Late payments cause cash flow to drop. The result of reduced cash flow is that 39.3% of respondents were late paying their suppliers.

What are today's B2B Finance Departments doing to increase efficiency and get around issues such as late payments, cash flow crunches, access to credit, and better fraud prevention? In this article, we'll explore all of these topics in-depth.


Automation Is Gaining Ground in B2B

B2B may be slow to catch on to new payment methods and technological advances in automation, compared to their B2C counterparts, but B2B efficiencies are moving forward and improving. This doesn't mean all B2Bs are moving forward in unison. While some move forward, others remain stalled. One example of stalling is processing paper invoices. Paper invoices are inefficient and have high labor cost.

Business Daily found that the cost to process paper invoices for SMBs was $16-$22. Goldman Sachs found that automation can reduce this cost to just $6 - $7, an over 60% reduction in cost. If automation provides such great efficiencies, why haven't more B2Bs implemented automated invoicing? One reason is that B2Bs assume their customers want paper invoices and that suppliers want to be paid via paper checks. Another is that B2Bs believe automation is too costly to implement.

There is an initial upfront cost of implementing automation. Once automation software is installed, there is a monthly fee, which is much lower than the labor cost to accomplish the same tasks. As for B2B customers only wanting paper invoices and suppliers paper checks, that simply not true. In Payments Journal found the following:

  • 82% of suppliers said they are “likely or are very likely to accept” a new method of payment from buyers.
  • 72% of respondents said they would actually prefer being paid electronically (via ACH or VCC).

B2Bs aren't going to eliminate paper from their processes entirely. From Payments Journal, 25% of suppliers reported they prefer paper checks as their primary means of payment. However, paper checks as a form of payment have been shrinking. The  Association for Financial Professionals found that in 2004, 80% of businesses paid their bills by paper checks. By 2016 that number had dropped to 51%, with digital forms of payment gaining ground.

Automating invoicing consist of two parts: an e-commerce platform and automated invoicing software. Assuming your business already has accounting software, the e-commerce platform, and invoicing software will all integrate together. This integration is necessary, so the software components can talk to each other. An example workflow will look like this:

  1. Invoice is generated and sent to the customer digitally.
  2. Customer logs into the online portal at your website to pay their invoice.
  3. Payment is processed via credit card, ACH, or e-check.
  4. Processed payment is entered into your accounting software.

The only employee interaction is the creation of the invoice. This is a drastic reduction in labor when you consider all of the various areas an employee must be involved to process a paper invoice and the accompanying payment. For the customer, they have immediate confirmation that their payment was received. They can also reconcile the payment in their books without any waiting. For everyone involved, the entire process has become far more efficient.

Depending on the software vendor, e-commerce, automated invoicing, and accounting software may all come in one package. Choosing one package to handle all three components will result in an easier integration and cost less overall. Quickbooks is a common accounting package for businesses. While it doesn't automate invoicing, it does allow sending out digital invoices with the ability for customers to pay them online. There are also add-ons for Quickbooks that can automate invoicing. Additionally, if you have accounting software but need online payments and automated invoices, there are services that can handle that too.

B2B Finance Outsourcing(source)

Better Financial Management Equals More Credit

Because B2Bs face a lag in getting paid due to customers not paying on-time, improving these late payments will improve cash flow. Improved cash flow means you'll always pay suppliers on-time. Paying suppliers on-time leads to improved business credit, which can result in better access to credit. 

To put the late payment issue into perspective, American Express reported that 81% of SMB invoices are 30 days overdue. This has created a scenario where the average SMB has just 27 days of cash on hand. These are tight parameters for any business to work within and don't leave much room for error.

Automation can help improve late payments. Because there is less friction (no mailing, paper documents, filing, etc.) involved with digital payments, you're more likely to receive on-time payments, claims Fundera. Increased on-time payments mean more stable cash flow. When applying for a loan, lenders consider stable cash flow as more valuable compared to inconsistent or sporadic cash flow. Besides improving late payments, there are a few other areas to improve that can help your chances of getting a loan.

It can be difficult for lenders to determine creditworthiness for SMBs. This is due to a lack of good financial records. Make it easy for lenders to evaluate the creditworthiness of your business. Besides keeping good records, suppliers are a great source when it comes to improving your credit. By having suppliers report your payments to credit bureaus, you'll begin building up business credit. Lenders will look at your credit profile as one factor when considering a loan. The better your payment history, the better your business credit score will be. 

Improvements In Fraud Detection

A JPMorgan 'Payments Fraud And Control Survey Report' revealed that 78% of businesses were the target of fraudulent payments. The unfortunate reality of that statistic is that for most business owners, fraudulent payments have become another "cost of doing business." This certainly doesn't mean you have to settle. Businesses that are being proactive in battling fraudulent payments can see a reduction in fraud.

Great improvements in fraud detection have been made through AI. By monitoring patterns of payments and analyzing historical data, AI software is able to identify potential fraudulent payments with a high level of success. Businesses can integrate AI-based fraud detection services into their payment process. Some e-commerce platforms or digital payment method processors will have AI-based fraud detection built into their software.

While B2B always gets a bad rap for being behind the times, there are B2Bs whose finance departments are on the cutting edge of payment methods through the use of automation. This trend is increasing as more B2Bs pile on to the automation bandwagon, greatly increasing their efficiency in the process.

Fraud detection in Finance(source)


  • Many B2Bs are still engaged in paper processing but, that is changing.
  • Late payments are an industry-wide problem but, there are ways to be paid faster.
  • SMBs are often turned down for credit due to a lack of records and ability in determining creditworthiness.



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Apruve enables large enterprises to automate long-tail credit and A/R so you can stop spending 80% of your time and resources on 20% of your revenue. We partner with each of our customers to solve their unique credit, payment, and accounts receivable challenges and build the right credit solutions for your markets, customers, and goals. 

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