Jorge de Lara
Vice President and General Manager for GCS
American Express Mexico and Latin America
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Expert Contributor

B2B Payment Solution Key for Company Growth

By Jorge de Lara | Wed, 12/09/2020 - 09:15

The current reality has produced a series of unprecedented challenges for companies of all sizes. From operational continuity to weathering unpredictable market shifts, the world of business is undoubtedly going through a volatile phase. But while every company has had to buckle up and navigate these tough waters, it is small businesses who could bear the brunt of this scenario, with many of them seeing their very survival at risk.

According to the National Institute of Statistics and Geography (INEGI), the average life span of an SMB in Mexico is 7.8 years. This reflects the difficulty entrepreneurial growth and development faces even during normal times. Add to that the challenges brought about by the pandemic and a drab scenario starts to form, with the National Alliance of Small Merchants (ANPAC) already picking up on the definitive closure of more than 150,000 businesses. 

Such a landscape requires small enterprises to leverage every resource available in order to continue moving forward, focusing on sustaining financial health as a foundation of their recovery. Finding solutions that respond to the needs of the company allows for a nimbler operation and builds business resilience.

This is where the optimization of B2B payments has the potential of yielding increased productivity while reducing costs. A strategic approach to vendor payments not only eases the burden on finance departments through better planning, it also opens paths of growth by not weighing down operations through disorganization.

There is a wide range of B2B payment solutions. The key resides in being able to identify which of them best adapt to each organization and its specific needs. While some solutions might be able to handle a large volume of transactions, others could be more readily adopted. Decision-makers need to consider the characteristics of each payment to find the balance that leads towards sound investment and away from wasteful expense. Below are some factors I’ve found can make a difference, particularly for a small business.

TRANSACTION AMOUNT AND VOLUME

Each organization should periodically reassess and determine its requirements based on the volume of transactions carried and the amounts handled. Digital solutions can be powerful allies in handling a large volume of operations but can become cumbersome where a point of sale payment terminal is more adequate. 
I have seen badly chosen systems hinder entire teams while the right match simplifies processes and ultimately can even drive profit. Companies should not simply adopt the first method they find but they do need to be able to transform if a new way of operating better meets their requirements.

TYPES OF BUSINESS EXPENSES 

There are several types of business expenses, with most businessowners focusing on the most visible ones, such as wages, leases or maintenance, depending on the type of business. There are, however, many others to consider, and even some which are commonly overlooked, like the expenses an employee or collaborator incurs while doing their job. Such expenses change depending on the type of company but are broadly known as Petty Cash. 
Despite the name, Petty Cash expenses can quickly become confusing and costly, particularly for a small business without a formal system to handle them. As enterprises grow, such oversight can easily imply overwork but can also result in noncompliant practices and cash loss.

Today, there are many digital solutions which companies can adopt to monitor such expenses, allowing managers to establish appropriate parameters for each initiative and collaborator. These not only reduce the risks mentioned but they can also lead to increased agility, particularly for businesses that rely on field activities. 

INVOICING AND PAYMENT TERMS

Markets work as an ecosystem, and as economies develop different practices, they become commonplace. Growing businesses need to navigate arrangements designed to sustain the long-term transactional nature of such an ecosystem, yet some practices can be quite challenging if a business is not prepared to handle them.
Such is the case with Deferred Payment terms, which in some companies can extend to 100 days. Vendors need to have the means to continue operating through these periods and this is where financing solutions can prove vital. 

A corporate card becomes ideal whenever teams need to cover payable short-term expenses while a line of credit or deferred payment plan can allow for the long-term acquisition of fixed assets. Knowing how to use financing tools gives businessowners the power to successfully drive their projects, even through extraordinary periods.
Whenever there is a wide offering, as is the case with B2B payment solutions, leaders need to focus on implementing what is right for their business, considering immediate needs while also thinking about mid- and long-term sustainability and future growth.

Payment systems are constantly evolving and recent technological development has accelerated the adoption of digital solutions, ultimately resulting in increased and more accessible options for small businesses. When properly leveraged, such solutions can become powerful allies in facing present challenges and paving a way to the future. 

Photo by:   Jorge de Lara