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The payment market for end customers (B2C or Business-to-Consumer) has reached a high level of maturity, with users readily adopting innovations launched by Central Banks and fintech companies. However, when it comes to B2B (Business-to- Business) payments, we see a different scenario. Many companies still face various bottlenecks in executing daily transactions and ensuring financial control of operations. This is due to the unique complexities and particularities that differentiate B2B transactions.
According to research conducted by Gartner, 94% of companies still carry out financial processes manually, without the use of technological advancements. According to Statista data, the number of small and medium-sized enterprises (SMEs) has grown by 25% over the past ten years worldwide, reaching approximately 358 million companies. Considering that SMEs constitute the majority of businesses in many countries, it is evident that there is a technological gap to be filled.
Given the need for improvement in the business environment, since there is a vast market that needs better service, there are optimistic projections for the growth of the B2B payments sector. According to Juniper Research, the industry of business payment solutions is expected to grow from $88 trillion in 2022 to $111 trillion by 2027, indicating the potential of this segment.
The good news is that many companies are already reversing the analog scenario and adopting technological innovations offered by fintech. These solutions promise to revolutionize financial areas, making manual processes, physical transactions, and paper piles completely obsolete.
International transactions are increasingly common in everyday business operations. With a more connected world, geographically dispersed teams, and a growing number of companies crossing their borders and seeking opportunities abroad, the need to make payments in multiple currencies is more recurrent. The reasons are diverse, such as purchasing technology services (cloud storage, CRM, design software, etc.), legal consulting, marketing, international media, investments, and imports of goods for core and support activities.
Technology services and Software as a Service (SaaS), for example, are among the most demanded by companies, with each department seeking solutions that best meet their specific needs. However, most SaaS providers do not offer payment options in local currencies at checkout, accepting only credit card or invoice payments in dollars or euros, which can make acquisition a headache. Credit cards are typically used as a last resort by companies for international purchases due to additional taxes and higher foreign exchange rates. Invoices, while preferred over credit cards, usually lack the speed and smoothness needed for transaction completion. This is because they require manual processes, submission of various documents for compliance, and the finalization of the transaction at a FX desk in the bank used by the company. As a result of this limitation, there are long lead times for transaction completion, impacting the productivity and processes of contracting departments.
Fintech solutions have emerged to reverse this scenario and streamline international payments. Through integration via API (Application Programming Interface), payments are processed via application in a fully digital and frictionless manner, with the option to operate in multiple currencies and for dozens of countries. This makes transactions faster and less costly, as they typically offer more competitive rates than those applied by traditional institutions.
Many countries have been experiencing sharp fluctuations in currency prices in recent years, especially following the economic effects of the COVID-19 pandemic, making foreign exchange operations even more unpredictable. Currency risk is another factor requiring delicate management for companies, and can significantly impact the final cost of acquisitions. In this context, technological solutions emerge as important allies for better transaction control, such as currency hedging, which ensures greater predictability, economy, and efficiency in cash management.
Each country has its own established payment culture, with the most common methods used in the daily operations of businesses. Therefore, it is crucial to have access to the specific payment methods for each region where a business operates. In Brazil, for example, Pix, local installment cards, and boletos are widely used. In Mexico, OXXO, which functions as a payment voucher, or SPEI, are very popular, while in Colombia, local and global digital wallets are growing exponentially, as is the case in the United States and Canada.
In addition to easy access to international transactions, platforms also offer integrated local payments, which represent a significant volume of daily operations, providing companies a centralized payment management in one place.
B2B payments also involve budget control and operational expense management across departments, as well as authentication and approval processes, which can be challenging in less digital environments. By automating financial transactions, it's possible to manage limits, expense control, approval workflows, and issue corporate credit cards for employees, among other functionalities, all within the same platform. This gives departments more autonomy and agility, allowing them to handle service procurement and payments more practically.
Reconciliation is another critical aspect in business operations. Essentially, it entails cross-referencing recorded transactions with bank statements, credit card bills, and other financial documents to detect and rectify discrepancies like errors, unauthorized transactions, or duplicates. Reconciliation poses challenges due to the high volume of transactions and the array of payment methods employed by companies, making it hard to spot discrepancies. Additionally, manual reconciliation is more prone to errors and inaccuracies.
To tackle these challenges, technological innovation is the key to reducing errors and enhancing business efficiency. It also aids in reconciliation and overall payment management, thus avoiding rework.
Technology also becomes a major facilitator when it comes to security. This is evident in procedures ensuring compliance with Central Bank rules for international transactions, commonly known as KYC (Know Your Customer) and KYT (Know Your Transaction), which are part of Anti-Money Laundering (AML) protocols. These processes can also be integrated into B2B payment platforms, being entirely digital and compliant with regulatory requirements.
When it comes to fraud, technology also serves as an ally in mitigating these incidents through sophisticated integrated anti-fraud systems, as well as all certifications that ensure security in transactions and customer data.
All the advantages we've seen previously demonstrate how the automation of financial services generates very positive impacts on businesses, primarily:
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