Digital payments provide considerable benefits to New Zealand organisations, but many have yet to make the switch to realise the potential.
Deloitte surveyed 150 medium and large organisations (67 percent in Australia and 33 percent in New Zealand) to ascertain key B2B payments metrics and trends.
The results indicate that card and digital account-based payment mechanisms are typically considered better, faster and cheaper by organisations that use them.
“Banks, payment technology companies and fintechs are increasingly working together to bring digital solutions to market to improve the whole process of making or receiving payments,” says Richard Miller, Payments Director, Deloitte.
Miller believes that new technologies, often brought to market initially by innovative fintech companies, are changing the way payments are being made and received.
“These card and digital account payments can be more than 70 percent more cost effective than a traditional purchase order process,” Miller adds.
“Particularly when you consider the downstream benefits such as better data for analytics and reporting (reported by 63 percent of buying organisations), improved cash flow (73 percent), and reduced manual work through process automation (74 percent reported reduced approvals and 68 percent experienced a reduction in administration).”
Miller says businesses and government organisations are increasingly looking to such digital solutions to improve productivity and reduce the time between invoicing and receiving payment.
“Eighty two percent of survey respondents reported that cards were faster and a very efficient way to streamline the overall procure-to-pay workflows, increasing the average speed of cards over traditional processes by 1.4 times,” he explains.
“And when it comes to being paid, 73 percent of the survey respondents rated faster payment as an important benefit of accepting cards, with 49 percent saying that cards reduced the cost of doing business.”
For Miller, users are shifting away from thinking of cards just as a tool for managing employee expenses, to realising the potential of digital payment and reporting solutions.
Sixty one percent of suppliers responding reported spending less effort in chasing payments, 60 percent claim better customer relationships, and 51 percent post improved reconciliation.
“These virtual accounts and payment platforms mean that a traditional card account can be used for a greater range of B2B payments,” Miller adds.
“As a result of digitisation opening up more opportunities, spending on card-based B2B payments has grown significantly since 2011 (up 42 percent in Australia and 66 percent in New Zealand).
“However, there is still considerable opportunity to improve take-up, with almost half of survey respondents (47 percent) not using the available solutions and 100 percent still having paper processes to support cheque payments.”
According to Visa, a key technology partner for banks across the region and sponsor of the Deloitte report, the future is about digitising processes and creating an integrated view across a portfolio of mechanisms, often through innovative tools developed by fintechs.
Rob Walls, Head of Product for Visa in Australia, New Zealand & South Pacific explains that along with its bank clients, Visa also sees new partnerships as crucial to future growth in financial services.
“Visa’s role is to set the conditions for our clients to innovate,” he adds.
“Our belief is that innovation can come from anywhere, which is why securely opening our network and partnering with the fintech community is so important.
“B2B payments are rapidly changing as the shift to digital accelerates. There is still substantial opportunity for businesses of all sizes to adopt more efficient ways to pay and be paid.”