- What's driving the rapid adoption of digital B2B payments across all industries, ranging from healthcare to technology to construction and more
- How companies are benefiting from more efficient and secure automated payments processes across accounts payable (AP) and accounts receivable (AR)
- How American Express is building automation into AR and AP processes to help companies of all sizes manage cash flow, increase efficiency, and access financing
John Adams (00:10):
One announcement that I wanted to make after this, we have a reception now there with we are we will have some experts, you can ask questions, they will be there and obviously everybody should come on this panel. We are going to discuss B2B payments, how they are modernizing across multiple channels such as healthcare, construction and more will also discuss improvements in processing in security for accounts payable and accounts receivable. We have two great panelists here. I would ask you to introduce yourselves and a bit about your firm and what you do.
R.J Ancona (00:49):
Sure. Hey everyone, I think we are standing in between you and Drake, so we are going to make this fun. R.J Ancona with American Express for about 22 years, I lead our B2B Product Partner and Client Management Team on the acquiring side. Spent many years also on the issuing side, working on small business and corporate as well. So happy to be with you today.
Anthony Peculic (01:14):
And hi, I am Anthony, like I am the Head of Banking as a service and cards at Cross Server Bank. Been at Cross Server for a year now. I have been in the cards and payment space for over 22 years and have varied experience in commercial and the consumer side. And again, thank you for having me here.
John Adams (01:33):
Great, thank you. Thank you both for years the discussion has been around B2B payments, lagging consumer payments and of automation. What caused that gap and how is it changing?
R.J Ancona (01:47):
Yeah, so I will go first. I think listen, B2B processes have always been a bit more complex really just due to a lot of the information, a lot of the processes that go need to go along with facilitating commerce in a B2B world, rather that be data that needs to be communicated, whether that is checks and balances, approvals that need to go along with all of that. And of course as companies acquire other companies, they are decentralized. So a lot of IT processes have struggled from not being automated over the years. I think the pandemic has shown that that can very quickly change, but also I think just consumers in general and operating as a consumer in your B2B environment I think shows that consumer demand and the ease of doing digital, implementing automation within a B2B context can make everyone is lives much easier. And I also think just now the pressure on cost containment in general, that is proving out to be extremely helpful through automation and I think that is accelerated things as well. I also just think in a consumer environment we are much easier to adopt digital infrastructures if it makes our everyday lives easier and oftentimes then the B2B processes come second to that.
Anthony Peculic (03:22):
Yeah, I think exactly the point. I think from a FinTech perspective, a few things have been happening in the market. I think first of all, startups have been more inclined to do consumer businesses because there is been more funding, let us just say more focused funding. And I think yeah, B2B can be harder. So there is an adoption curve there. The way you sell solutions sometimes requires as we call feet on the ground versus digital. And so a lot of the older methods, if you will, of selling, of adopting come into play. I think also and what that in turn has done, if you think about it from a processor perspective and everything else, most of the solutions have been built to do direct to consumer and then there is been applications of trying to use that in the SMB or the corporate space. Well I could take a debit card or a credit card, I can shift it a little bit and make it work in the space for example. And I think that that has changed the last few years. We have seen some tremendous growth and innovation and focus on automation of payments in particular. I think you just said. And Covid has definitely been a big factor. I do think the economic situation we are in right now is also forcing companies and others to provide solutions to address cost cutting and the inflation. So definitely I think there is a perfect storm of things that have happened, but now I definitely think B2B has become sexy if you will.
John Adams (04:55):
Now we are talk a bit about the lingering portion of business payments that are still in check. We have written for years that it is half, I saw some match at data recently that is says it is as low as 33%. What is the, let us say lingering amount of paper checks that are involved with business to business payments?
R.J Ancona (05:18):
Yeah, it is a good question. I mean you guys still using checks in the B2B context? I think it, it is out there still. I think other, we were talking this morning, other countries are probably still laughing at the United States for it, but it is out there and I would say it very much varies based on the industries I work with. If you are in a very decentralized environment, it is much easier in a lot of cases to use checks. It is much easier to also depend on automation if you do it. But the fact of the matter is we have developed an infrastructure over the years that is heavily reliant on check processes, the data and the security that goes along with that. And as with anything, when you develop an infrastructure around something, it is not so much that there is not a desire to move off of it, but there is some very real trade offs and a real cost to moving off of it.
(06:14)
And I think what we have seen over the years is that checks is very much going down. I mean you can argue whether it is 33 or 23, but nobody can argue with the fact that it is going down but it is still around. And so when you look at forecasts, I think the notion of checks being around in 10 years time, yes they could be, but they will be significantly less than they are today. And new technology like virtual card payments, tokenized payments, the data that is coming along with new B2B payment infrastructure is replacing that. And I think depending on the industry, depending on crises, COVID 19, it accelerates that. And you know, look at the infrastructure in China as an example. So when you do not have digital point of sales for credit cards, it is much easier to adopt and go straight to app-based payments or QR codes because you do not have an infrastructure around that. And I think that is what is holding us back with checks in my opinion. But there is a very real data piece in B2B that goes along with that and we are solving that through as an industry through technology and automation.
Anthony Peculic (07:32):
Yeah, I think a few things are a factor. I think for sure checks can be easier to make payments, they are instant, you pay cover it. I do think with the instant payment rails advancing in this country with Fed Now RTP, I will think that will help accelerate the other thing eventually we were just talking about this as well earlier laws and other things have to come about right to push people to innovate sometimes or companies need to say enough is enough and stop doing checks. I know it is a big deal, but I think once we get to that point where we feel comfortable and companies stop saying, okay, we won't support check payments, we need to make everything digital, I think you are going to start seeing it a massive acceleration of removal as we did with anything else, the older school methods of payments or whatever it is. But fundamentally our job in the industry is to figure out how to make the connections easier, how to provide that ease of use, but also how to make it instant. At the end of the day, I want to hold my money as long as I can. I do not want to give you money and wait three to five days. Well it it is that kind of situation we are in and checks until something changes that is going to continue to be the case until we do something to change it.
R.J Ancona (08:54):
We are also increasingly living in this era of having and we will multiple forms of payment. So the best companies that I have worked with have accounts payable and receivable processes that respond and are able to take different forms of payment depending on the value that they bring to both the buyer and supplier. And I think to Anthony's point, you are either trying to hold your money for as long as possible or trying to pay your money or trying to collect your money as quick as possible. And the best processes that I have seen optimize that between buyer and supplier in a way that is really varying per payment method. So I think we are also going to see checks still play a role while it will be a diminishing one.
John Adams (09:44):
How about a consumer technology? What kind of influence is consumer payment technology having on business payment technology?
R.J Ancona (09:54):
Well, I mean for me there is the user experience alone. So I was just buying something this morning on my phone and Apple Pay sort of filled in everything in was super easy to click, look up at Amazon and as long as companies get the data that they need, have the approvals have the cash flow associated with the transaction that they want, whether that is invoice terms being met or whether that is generally just transferring the risk to the right party. That sort of real time ease of a consumer experience I think is very much playing out in the B2B space. And think about the notion, I always tell people, imagine years ago when we did not have automated expense reporting tools and we were all traveling and then filling out paper expense reports and shipping them somewhere for approval only to then either have our corporate cards paid or to facilitate a payment and get reimbursed. When you imagine that, think about how archaic that was. And so the automation is very much coming off the back of consumer experiences, which is building in the trust, the credibility and the controls. I think just in B2B there are many more players involved typically from a workflow perspective and from a supply chain perspective. So that makes it a more complicated but does not change. I think the desired consumer experience.
Anthony Peculic (11:27):
What I always say is that as sometimes when we go into work and if you worked in different industries or different types, I used to work in payroll, I used to work in things. When you talk about user experience, a lot of times you fail to realize yourself or think about yourself, you feel that, you think about it, I need to have these 50 buttons. And what it comes down to simply is things like we are using Venmo, we are using PayPal, we are using these things, these are things we we have gotten used to so people feel even if it is a business, why should I act differently in the sense that when I receive payments or send payments, I want to have the same capabilities, why would not I? Right? So that is why I think if you think about where technology was and where it is and going to be, we continue to evolve it and the B2B space is made drastic leaps and bounds over what it used to be.
(12:17)
I think I remember those interoffice envelopes to send those things in. But it is even just like we have clients that do expense cards of course, and it is a great experience. You use your app or you do all that. So it is both the sender and receiver and really trying to solve for both ends in that way to understand, oh, somebody is sending me money, I could go and quickly sign this up and transfer that money, either push to car transaction or I could do RTP, I could do something to get that into my account. it is now becoming commonplace and it is not asking them to do something that they are not used to. And so that is where I think that consumer technology has significantly helped this space and will continue to push it and pressure it to meet those demands.
John Adams (13:00):
RJ, what is some of the work that you you are doing at American Express in this area that is about increasing automation for accounts receivable? Accounts payable?
R.J Ancona (13:12):
American Express is in an interesting spot because of course we are an issuing and acquiring network. And so the investments that we have been making over the past several years have been leading to bringing those two buyers and suppliers much closer together to really make the optimum experience between both. And so when you think about several years ago we acquired a company called Harbor Payments. Now since invested in API automation proprietary solution, we purchased a company called ACOM Pay. We have a number of partnerships that have been very much around virtual card, real-time payments, the rails associated with that. We purchase cabbage in order to do more surround town services for small businesses associated with moving money. And recently we started to do more on the supplier or on the merchant side. Associated with that we have announced partnerships with Build trust and versa pay to make it easier for suppliers or merchants to receive those payments.
(14:25)
And then in January of this year, we announced an acquisition of a B2B FinTech in Israel called pendo who does a lot of the buyer supplier ecosystem and invoicing capabilities in between. The whole idea behind that is to make the buyers and suppliers transact in an easier way, whether that be the data, the communication, the terms and the cash flow. And to do that really have to meet the needs of both the buyers and the suppliers. And I think historically what we have seen in the industry is everybody does something good in a piece of that everybody is, a lot of the fintechs are bringing a piece of that and a lot of the networks are issuing or acquiring. And then obviously you have the MasterCard and visas as well. And I think increasingly what we are seeing is partnerships and having capabilities which support the overall value equation between buyers and suppliers is super important because it is not a buyers want to do it this way and therefore merchants or suppliers have to accept that and it is not the other way around either.
(15:39)
And so we do a lot of consulting between buyers and suppliers to talk about optimizing terms, optimizing processes between the two. And it is important that partners like American Express, we have the technology to be able to back that up and we partner with Cross River as an example. So I think this notion of whether you call it frenemies or whether you call it coupling, conscious coupling, I do not know what you call it these days, we are going to take that pun as far as we can take it, but it is important, right? Because we are not, we are in an industry where if you try to be everything to everyone, it is going to be really hard to do and the infrastructure and the services between all parties are super important.
John Adams (16:25):
Anthony, what some of the work that is going on at a across river that leans into some of this innovation.
Anthony Peculic (16:31):
I think Cross River has traditionally has worked across the spectrum, but we have been more on the consumer side. If you want take a look at in the programs, when you look at my peers and the lending side in the cards and bass space, we have actually had some experience in B2B and it is actually shown to be a very successful vertical, but it does require a lot of different ways.
R.J Ancona (16:54):
I think you said sexy Anthony, I think you said.
Anthony Peculic (16:56):
It is very sexy. Yes, and so we are getting into, yeah, so basically when you think about how you sell even or what the end customer's goals are, they are different. Consumers are thinking of things differently. They look at different things. it is about, oh, I have to have these features. I have to the app has to look a certain way and the business side it is about at the end of the day it is about saving money. Let us face it. That is usually number one. And is it easy to implement? And so when you go and sell these solutions, you have to build out a process, but also how do you support and understand the scale and different regulations? In some ways it is easier, sorry for risk, people do not yell at me, but in other ways it is not right. there is risk. KYB is a more difficult process to do when you get into the smb, right then a KYC or SIP.
(17:50)
So I do think that there is elements of things you have to incorporate and understand and bring that expertise in house as much as you can. For us, we are very supportive of this space. I tell people this is to me a great growth area. There is a lot of open space as you just said. It is basically, we were talking again earlier, we had a conversation it is like, well, everyone wants to hold on to their share, but there is so much more share out there. Mean you just mentioned the amount of checks, think about the amount of payments that still are done via check or paper. Those can be converted to some extent to some sort of digital payment. That is what we think about is what is out there. But also for us, we use the term financial inclusion and I incorporate small businesses into that where some people think about the underserved of course and everything we do there, but there is a lot of small businesses that do not have access to tools and various things that they now have a little more.
(18:47)
And that is part of what we need to do in the space is that how do we make a company of a hundred thousand employees versus a company of 20 employees have at least the access if they need it to similar types of solutions to pay vendors or to pay different things, that is a challenge and I think that that is where FinTech and all of the successful players like American Express and that is part of our partnership is like how can we come together, for example, both on the consumer and commercial side to do that. I think that that is where the winners are going to be. Those that embrace that versus trying to fight each other, oh, you are the old school people or you are the FinTech ones, that is never going to get us to where we need to go.
John Adams (19:26):
Based on your recent experience, what have you learned about B2B payments that is important for the market to know?
R.J Ancona (19:36):
For me, my team is organized by vertical. I happen to be a strong believer that the value proposition of B2B payments differs. People say by vertical, but what it really comes down to is the buying journey and even within vertical that could change. I have customers that have distribution centers who have ecommerce, who have feed on the street sales folks, and then I have some customers who are literally selling to distributors, three of them. And so how you facilitate value in B2B payments in that mix I think is very customized. But then when you think about, Anthony just mentioned sort of access to the communities that need access to funds in general, the same thing exists on the other side. If you are a small business or if you are a corporate, right, where you get your capital, how you started out, whether or not you are public or private, how you are funded in general, I think very much dictates sort of how and what is going to be important to you, your cost of capital, whether or not your buyers are extremely risky and so therefore who are you depending on to accelerate and collect payment.
(21:03)
All of those conversations we have with our customers, and I think a lot of times people assume B2B payments is this sort of, you have check ACH, you have these very core elements of it, and the fact of the matter is it really does differ. And in some cases we have small businesses who are very, very well funded, who are financing a great deal on our card products. And then you have some small businesses such as construction companies or contractors who are perhaps do not have access to the systems and the automation to get the funding they even need. So how we approach those customers needs to be very, very different and it tends to be by industry, but like I said, it is more for me about the buying journey and the dynamic of how you reach your end consumer.
Anthony Peculic (21:53):
Yeah, I think it is important for those that are looking to get into space if they are not right, and I will start there to think about it, there is elements of consumer you can use, but it is not consumer. At the end of the day, I can not emphasize enough. The simple solutions that are clean, easy are the ones that tend to be more successful, but also it relies heavily on making sure you have the right partnerships to biller directories and things like that. Those are things that will make or break you. At the end of the day, even if your user experience is not the greatest, it looks like 1995, Amazon, you know, still can get away with making doing well because again, the ideas is about, it is about me being able to send the payments out. I have access, and it is also about being able to do it simple and at a good cost.
(22:47)
Those are the things that matter. Eventually over time. Of course, user experience matters, but you also have to be careful when it gets too complex because if we are thinking about getting into the small business space, these are small business owners, they are busy with 25 different things. Last thing they need to do is to get a manual to figure out how to do certain things. You have to think of it that way. And so how you go about doing it, and there is been some really successful players in the space that have done, of course American Express is one, but there is others like Intuit, others who have played in this space in different ways that figured that out and are hugely successful and scaled their business to the point where they are doing really well and they are providing solutions and getting access people tools and things that they need. That to me is most critical, is understanding at the end of the day who you are talking to again, versus trying to make the super app of B2B, which you know can eventually maybe get there, but again, you have to understand the audience and going vertical. I agree completely. The construction is different if you own a hair salon versus if you do whatever else. There is an understanding that you do need to have and nuances associated with those and so your audience understand what you are doing. But again, keep it simple if you can.
John Adams (23:59):
All right, we have some time for some questions from the audience. Is anybody have a question?
Anthony Peculic (24:09):
I think people want to go have a drink.
John Adams (24:10):
There are the drinks.
Anthony Peculic (24:12):
Yes.
John Adams (24:12):
That is okay. Okay, where we go. Well, I want to thank RJ and Anthony for doing this panel and I am going to thank everybody who did a panel today and attended and participated. We greatly appreciate it. Thank you. Refreshment and experts. Ask the experts afterward. And so again, thank you everybody. It was a great panel. Thank you.