JPMorgan: Automated Payments Deliver Cash Flow Magic for B2B, B2C Businesses

Business packed a decade of learning into two years, and for chief financial officers and treasurers, that knowledge can be distilled thusly: Automated payments are better, whether it’s business-to-consumer (B2C) or business-to-business (B2B). Speaking with PYMNTS’ Karen Webster, J.P. Morgan Managing Director, Industry Head — Technology, Media and Telecom Jennifer Acosta and Managing Director, Integrated Payables, Strategy, and Network Chris Claus discussed changes to the payments landscape and how B2B and B2C are moving in similar directions. Acosta said there are  “two separate conversations” happening now — one on the highly engaged consumer side, where “it’s the consumer saying, ‘Here’s how I want to pay you, and here’s how you need to integrate.’ On the B2B side, it’s all about optimization and continues to be.” Acosta said the B2B side of the house is “on a little bit more of a slow roll relative to getting into some of the new payment types,” while adding that options like same-day automated clearing house (ACH) and real-time payments are getting traction — a good thing, considering “that’s where the world is going.” Remarking that digital payments support a stronger cash management strategy for B2B operations, Claus said, “They’ve gone through a tough couple of business cycles, [made] a lot of moves to digital through the pandemic, they’re automating workflows, and with that process is an opportunity to automate and digitize payments.” Leveraging that opportunity is especially important for the B2B sector, which lags the innovation seen in consumer payments, including the ongoing use of paper checks by many companies. “You see eCommerce spend has just exploded,” Acosta said. “What that’s saying is that our consumers interact with us in a digital way, and we need to figure it out.” Now, the move is to capitalize on the demand and give corporates “an opportunity to adapt and create new business models and new experiences for the consumers they interact with to make it a positive experience,” making people want to spend time in the ecosystem, spend more and ideally use an automated recurring payment, benefiting both sides. Data Decisions Data is the invisible force deciding where money moves and how fast, and digital payments with accompanying data are the frictionless state dreamt of by individuals or corporates today. From Acosta’s B2C viewpoint, “Data is the most important piece of the process, because once you start interacting with your consumer on a subscription basis, on a recurring basis, you know what their preferences are, the types of things that they’re buying.” That opens numerous product and service recommendation opportunities and suggests new revenue streams for consumer brands, increasingly served in contextual ways. Claus said that’s also happening in B2B, where “it’s contextual to media-buying platforms, to travel booking systems, and generally across corporates into ERPs and other e-procurement systems. That is happening not just on the receive side for the consumer, but also the [B2B] side where the payments are contextual. This digital workflow enables digital payments.” For B2B outfits, digital payments and the data that rides along can be transformative. Imagining a B2B buying situation, Claus said, “There’s an invoice that’s raised or a purchase order. Having the payment flow through that and tie back to that actual buying situation underneath it — were there any exchanges, shorts, etc. — really helps automating reconciliation. It also provides a mechanism to start to offer different pay modalities. “These can be electronic payments, but also faster payments sometimes for a fee.” Businesses will pay to get paid faster, and real-time data is a necessary ingredient for this to happen at scale. As in consumer finance, automated payments create reliable revenues. “We power a number of software companies and their payment wallets,” Claus said. “There’s an opportunity to monetize the speed of payment, not just pay in 30-60 days, but do you want to get paid immediately? Faster payments help cash flow, and it helps both sides.” Simplicity Wins Automating payments requires the right stack and partners. Companies with a more digital-first footing are naturally having an easier time with it than legacy operators playing catch-up. Using the streaming example, Acosta noted that many media companies were not digital-first. In those cases, “They’ve had to set up an entire new ecosystem, including web engagement, engineers, technology, investigating all these new types of payments,” Acosta said. “What does it mean for us from a risk standpoint? What do we want to accept? Who do we want to engage with?” Claus added, “More and more business flows are becoming digitized. There’s opportunity there.” Reciting a litany of use cases from embedded payments to tokenization to messaging and identity security, Claus said, “Our ability to provide value-added services for our clients to take the pain out of payments and help digitize and automate this, that’s our role in this ecosystem.” The trick is turning one-time events into return engagements, whether it’s a streaming platform or reordering supplies for a plumbing contractor. Simplicity and removing friction are vital to this. “We’ve definitely seen a keen interest from corporates to use one solution to affect all my payments, to make it easy to manage and exchange and communicate with that solution,” Claus said. Acosta added, “I want to integrate one time and then let the bank figure out how we engage in these different payment types on the back end. It’s simplicity, it’s ease of integration and real-time engagement throughout the process.”