Efficiencies and Challenges of B2B Real-time Payments


Share post:

The payments ecosystem is constantly evolving due to new trends and technologies. While invoice settlements used to take days, banks can now receive payments rapidly with real-time payments (RTP).

B2B RTP helps financial organizations manage their cash flow efficiently, achieve better cash positioning, and simplify payments. However, there are significant downsides, like interoperability issues and high overhead expenditures.

Here are a few efficiencies and challenges of RTP.

Efficiencies of B2B RTP

  • Enhanced Efficiency

Paper-based payments require hours of administrative effort. They must issue invoices, track payments, and reconcile the accounts. RTP saves time and money on payment collection.

  • Better Cash Flow

Banks can immediately access the funds with real-time payments instead of waiting days for payments to clear. It improves cash flow by ensuring they have the money to pay for their suppliers and staff. As per a recent report by PYMNTS, “2022 Continues Strong Growth For Real-Time Payments,” 42% of financial organizations said that cash flow management enhancements were a vital advantage of real-time payments.

  • Improved Protection

Dedicated RTP networks are safe and secure, with fewer chances of manual error due to their end-to-end process. While payments process over the network with all bank checks in place, they are less susceptible to fraud.

  • Higher Global Reach

Due to enhanced convenience and speed, the RTP benefits both sides of B2B transactions. It gives banks a competitive edge in a global marketplace since they facilitate international transactions and settle them quickly.

  • Better Communication

RTP networks facilitate two-way communication. It allows payers and recipients to provide more insights about the transaction. The robust communication eliminates potential misunderstandings.

  • Simplification of Process

B2B payments are time-intensive and expensive to process. An RTP network streamlines the payment process. It reduces costs and preserves anti-fraud and transparency measures. Hence, businesses can reduce the costly fees and time-consuming paperwork with the help of real-time payments. While the payments rapidly reconcile, banks can focus on more critical tasks.

  • Good Cash Positioning

In addition to cash flow improvements, real-time payments enhance the bank’s cash position. Potential partners and investors generally view cash position as a financial strength.

Cash positioning shows that finances have the capital flexibility to invest against losses. An RTP system creates confidence that financial organizations have a solid financial core.

  • Improved Liquidity Management

Better liquidity management allows financial organizations to meet short-term cash obligations and liabilities. RTP offers better liquidity management. It ensures that the banks have the cash to pay bills even during uncertain times.

Moreover, a payment stuck in the processing can cause problems if the company is over-leveraged. An RTP transaction makes getting the money into the bank account seamless.

  • Impactful Business Relationships

When a vendor pays, businesses must wait until the payment clears, especially when there is a lack of mutual trust. Real-time payments eliminate the waiting time and rapidly inform once the payment is processed.

It removes any doubt the financial organizations may have while waiting for their partner’s payment. More importantly, a seamless and transparent process improves vendor confidence.

Challenges of B2B RTP

  • Business Interoperability

Businesses involved in the transaction have contrasting natures, from payment terms and the preferred payment choices to the number of rounds of decision-making. A seller, for example, may prefer a bank transfer, but the businesses will refrain due to high transaction fees.

  • Security Vulnerabilities

THE STAKES AND SECURITY CONCERNS ARE HIGH since B2B payments involve high-volume transactions. Financial organizations must ensure that no confidential information about the business, customers, merchants, or partners gets leaked.

Dangerous threats like business email compromise (BEC) adversely impact companies. Hence, they must set up robust safety and compliance policies.

  • Interruptions in Financial Workflows

Many financial organizations are yet to adopt automated workflows and payments. Manual operations require businesses to deal with manual tracking and cross-team communication. It leads to revenue loss and resource wastage.

  • Lack of Money Flow Tracking and Delays in Funds Settlements

Effective money flow tracking is crucial to reconcile and enhance profitability. However, insufficient transaction tracking can cause errors, and a lack of communication can drain resources.

The payment terms period could add a settlement window as the online transfer modes for B2B payments delay the settlement periods. A payment gateway that processes transactions must wait for their funds for a few days.

  • High Overhead Expenditure

The payment methods require businesses to pay a percentage as the transaction fees. Due to the increasing volume of transactions happening daily, this could financially burden the organizations.

Also Read: Challenges of B2B Payments and How FinTech Revolutionizes the Process

How Financial Organizations Can Overcome These Challenges

  • Settle Funds Instantly

Financial organizations must employ multiple payments. These payment options help businesses transact and settle funds instantly.

  • Prevent Risks and Security Threats

Financial organizations must reduce fraud and security risks that could drastically strike the business. They must always on-board all customers after KYC checks and ensure complete compliance.

Building a card program for the business unlocks additional revenue streams. It helps banks earn interchange revenue for every transaction on the card.

  • Minimize Payment Collection Costs

Businesses must automate B2B payment collections. It will help them reduce their expenditure. They must create payment links and share them with customers, partners, and merchants via multiple channels. They must also add beneficiaries without any cooling periods and initiate the transaction immediately.

  • Real-time Transaction Reconciliation

Businesses must avoid using manual payment reconciliation methods or invest time to track the origin of each transaction. They must employ real-time transaction reconciliation and enable the same for the customers.

Apoorva Kasam
Apoorva Kasamhttps://talkfintech.com/
Apoorva Kasam is a Global News Correspondent with TalkCMO. She has done her master's in Bioinformatics and has 18 months of experience in clinical and preclinical data management. She is a content-writing enthusiast, and this is her first stint writing articles on business technology. She specializes in marketing technology, data-driven marketing. Her ideal and digestible writing style displays the current trends, efficiencies, challenges, and relevant mitigation strategies businesses can look forward to. She is looking forward to exploring more technology insights in-depth.


Please enter your comment!
Please enter your name here


Related articles

Best Practices for FinTech Compliance

In financial tech (FinTech), following rules is important. FinTech firms operate in a fast-changing world. They must know...

UK Businesses Modernising to Enhance Security and Counter Fraudulent Activity

American Express today released new research revealing that UK businesses are investing in modernising their payment systems to...

LiquidityBook Redefines Trading Technology Again with Release of LBX PMS 2.0; Accelerates Multi-Asset Capabilities via Acquisition of Messer FS

LiquidityBook, a leading provider of cloud-native buy- and sell-side trading solutions, announced today the general availability of LBX...

PayPal, Venmo Credit and Debit Cards Are Now Available to Add in Apple Wallet

PayPal Holdings Inc. announces that customers now will get the option to add their eligible PayPal and Venmo...