Government is a Major Driver of B2B Commerce

While organizations of all kinds the world over benefit from B2B technology and practices, one of the most prominent is government, according to Bob Cohen, North American vice-president for Basware.

“Governments are forerunners in pushing connected commerce,” he wrote in his column Paythink recently. “More than fifty governments around the world are in the process of implementing e-invoicing mandates and are pushing for a supportive infrastructure to enable agile e-commerce.”

He cited tax compliance and fraud reduction as significant drivers in the push, noting that efficiency and savings were major factors domestically, with the U.S. multi-agency Invoice Processing Platform resulting in a $20 processing cost reduction on federal invoice processing.

For the European Union, borderless commerce has been the goal, he said, with an interoperable e-invoicing standard. Government suppliers must now conform to the standard, which is causing it to proliferate within private industry as well.

Other benefits emanating from government e-commerce include the untethering of financial process, he added, through the exploitation of cloud technology and mobile platforms. Business and supplier networks, experiencing rapid growth, are simplifying and accelerating governmental requisition processes in turn.

Finally, he noted, the increasing demand for real-time payment and financing options by businesses in general have made government uptake of B2B prudent in any case. And the analytics that modern B2B methodologies and systems enable are causing both governmental purchasing systems and suppliers to grow ever more efficient over time.

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Managed File Transfer">

Some Common Misconceptions about Managed File Transfer

Though the adoption of Managed File Transfer within B2B-integrated partnerships has been significant, a number of misconceptions about the technology remain pervasive, and can inspire reluctance in some partners to implement it – to the detriment of all.

The average employee sends/receives fifteen email attachments a day, for a total of over 5,000 attachments a year, per person – and even if that seems a little high, it does confirm that a great deal of ad hoc data transfer is occurring, much of it informal, yet in support of formal B2B processes. This compromises the security and robustness of those processes, while diminishing data integrity.

Managed File Transfer is the technology of choice for dealing with this maverick data handling; but its effectiveness depends upon its adoption throughout the supply chain.

IT Business Edge cited several misconceptions about MTF that could hinder its adoption:

1. MTF is only about moving data from Point A to Point B. No, it is also about implementing consistent security; reducing user error; and achieving deeper integration with the systems handling the data;
2. It is redundant; employees use IT-approved company email and systems for data transfer. In fact, almost two-thirds of employees surveyed said they have used personal email for storage and transfer of company data, so email should be eliminated as a data transfer method altogether;
3. Existing FTP and other methods are fine; employees know what they’re doing. No, nearly half of employees surveyed are unaware of their companies’ data transfer policies, and a third said that no such policies existed;
4. The existing data transfer policy is effective. How is it possible to be certain of this, when un-managed file transfer by definition cannot be monitored?
5. MFT is too expensive to implement. While it is true that MTF is more costly than conventional file transfer solutions, it is easy to see that it pays for itself in recovered downtime in supply chain operations, which are costly throughout the supply chain.

An obvious means of mitigating the reluctance of a B2B partner to adopt MTF is to offer incentive for adoption throughout the supply chain, making it a standard throughout, and sharing the costs of implementation and maintenance. This approach in itself can satisfy many of the objections and make for a smoother adoption.

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Important trends are impacting B2B priorities and agendas

While many of the trends in B2B, such as the use of managed file transfer and increasingly ubiquitous shared standards, may be obvious, a great many are not. The B2B landscape is changing swiftly as consumer supply and demand dynamics continue to evolve at an astonishing rate.

The International Data Corporation cites a number of less-obvious trends as important cues in B2B integration strategy and planning:

1. Consumer empowerment. The modern consumer is making increasingly informed decisions and can become well-informed faster than ever, thanks to the Internet’s easy access to information and consumer reviews of products and services;

2. The complexity of globalization. Extended communities of partners are now increasingly common in the face of the growing global economy; new markets are emerging at break-neck pace, and low-cost sourcing is increasingly common;

3. Volatile demand. The consumer’s proliferation of choices and easy access to decision-driving information have resulted in diminished brand loyalty, making supply chain performance increasingly important in product selection;

4. Accelerated business. The Internet-driven acceleration of business in all industries has increased the priority of agile performance and response in every member of the B2B supply chain.

Each of these somewhat passive realities has added to the urgency of increasing flexibility and visibility as essential steps in adapting to the evolution of the marketplace, IDC has found. As the demands and expectations of consumers are steadily ratcheting up, the internal prioritization and self-imposed discipline to answer that demand with similarly-improved performance and adaptability have become mission-critical.

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Innovation can drive consumer and business demand in B2B e-payments

Today’s electronic payment scenarios are varied, with multiple payment verticals required at various and diverse points in many supply chains. These can include a number of differing payment cards: consumer-to-business, custom-loop, closed-loop, business-to-consumer (incentive cards) – and finally, in B2B, supplier payment cards.

Also called virtual cards, supplier payment cards may be used to optimize supplier payments for accounts payable organizations, said Eric Mettemeyer of Store Financial.

“In the supplier payment space, we’re seeing a bit more velocity and activity,” he said. “The reason for that is there continues to be so much friction in the process of paying suppliers – you can tell that when you see the number of checks still in the system to pay suppliers today. That shows the value of an ACH or P-card transaction must be fairly low, because otherwise you’d see a lot more transactions moving from checks to those forms of payment. So I think there’s a lot of opportunity, and people see that.”

Focusing strategic attention on that payment flow in supplier payments, he said, can lead to significant process improvement and increased efficiency by eliminating additional check-writing.

Mettemeyer added that his own organization has innovated to stimulate increased adoption of alternate payments methods. The barriers, he noted, are not insignificant:

“A lot of times the supplier will look at a card and say, ‘Well, all you’re doing is increasing my cost.’ But you need to approach it by saying there will be a cost, but the supplier will be paid earlier, and from that perspective, it can be a win-win. We’re trying to look at the entire process of accounts payable and insert our programs where they most benefit.

“In supplier payments, we’re focused on having a very consultative approach to accounts payable and making sure that we have the right tools in our toolkit to fully maximize supplier acceptance of cards,” he said. “One is certainly having different levels of cost to accept cards for suppliers, and two is having the tools available to properly educate the supplier and having a very good, well-rounded supplier enablement team and process.

“Between taking advantage of the smartphone and the app on the consumer side, and innovating around the structure of the way payments work through the networks on the B2B side is where we’re focusing our innovations.”

Educating suppliers in the B2B environment is a key strategic point, he said. That education takes time, but ultimately increases adoption, he said.

“In the past, the large issuing banks have gone out to their treasury management clients and delivered a p-card, but there wasn’t any education and it didn’t work very well. Adoption was very low. So a lot of buyer organizations don’t even want to talk about virtual card programs because they think it’s going to fail – they’ve been through the p-card process before. So there’s been a lot of education, change, and innovation in attacking the problem with more thought this time around. You’re seeing more adoption and companies are certainly making end roads.”

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