COVID-19 has had a profound impact on businesses across all industries and has created a residual ripple on their supply chains, largely made of smaller and mid-size businesses. The upheaval of this past year’s events has left businesses working to find new suppliers, building new relationships, reinforcing existing relationships, and reconfiguring their supply chains to keep their businesses on track. All of this has placed pressure on suppliers’ cash flow and liquidity, creating an increased need for timely payments from the companies they do business with and a heightened demand for smarter payment solutions.
Poised for Change: The B2B Solutions Landscape
This demand is being met with significant transformation to the commercial payments industry, an enormous market that represents $127 trillion in payment volume globally, with $26 trillion in the U.S. alone, according to Goldman Sachs. As consumers ourselves, we all know how easy, and now essential, it has become over the last few years to pay for personal items with little more than a tap or a click from the comfort of our home. But until now, many of our large business counterparts have not benefited from such simplicity, with many big buyers – and their suppliers – waiting for payments technology to catch up to their evolving needs.
Why is that? Because of the scale and complexity of the solutions needed. Manual supplier payment negotiations and payment processing continues to be time-consuming and complicated even though the vast pool of payments between buyers and suppliers for goods and services – such as raw materials, office supplies, and temporary help – are what keep businesses along the supply chain running. Despite their core importance, most vendors along the supply chain receive payments 30, 60 or even 90 days after providing a service. At the pace of business today, those terms are not always favorable to cash flow. Often, it’s actually in the best interest of the buyer, which is typically a big company who buys services from small and mid-size suppliers, to delay payments to free up working capital, for example. With cash flow issues affecting businesses across the globe amid the pandemic, some governments have even had to step in to help manage the frequency of late payments. The U.K. and Netherlands, for example, are in the process of requiring large companies to pay vendors within 30 days instead of 60.
Here’s where technology can come in to be a game-changer for businesses during a time of unprecedented challenges: according to a recent study, adopting automation and early payment discount functionality could enable businesses to realize an estimated $9.2 billion in savings in the U.K. alone—which could make the difference between merely surviving and thriving.
That’s where American Express comes in. Many people think of American Express as a credit card company, and it’s true that we are the largest issuer of commercial cards globally as well as the number one issuer of small business cards in the U.S. But we’re also much more than that. We are an all-in-one financial partner that clients can trust to solve their business needs and help grow their operations—a role which is important now more than ever as B2B payments make up a significant portion of our commercial business.
To build on the momentum of our growing B2B payments sector and help businesses navigate and eventually recover from the COVID-19 pandemic, we are placing an increased emphasis on strengthening the relationship between buyers and suppliers through payment solutions that benefit both sides of their B2B relationship.
Evolving the Buyer-Supplier Continuum
Designed to modernize and unify the payments options available to companies, our strategy for strengthening the buyer-supplier continuum will help refocus valuable time and energy that is currently spent on operations back into the business itself. Our payment options will also further round out our already robust suite of digital payment tools, which include American Express One AP™, our first automated Accounts Payable solution that makes paying suppliers easier and more efficient for small and mid-size business owners.
Most recently, we introduced enhancements to Early Pay, a supply-chain payment solution that gives large companies and their suppliers the ability to pay and get paid when they want through one easy-to-use digital platform, allowing suppliers to improve their cash flow while enabling buyers to receive early payment discounts. With Early Pay, everybody wins: buyers reap savings, while suppliers are paid reliably and on the day they choose. New capabilities to the platform include more seamless supplier onboarding, accelerated tech implementation for buyers, and the ability to pay all invoices using the platform, including those not approved for early payment. Ultimately, this helps businesses seize greater control of their B2B accounts payable, generate extra cash from early payment discounts, and finance their payments should they need the working capital—all while strengthening relationships with key clients and vendors.
As the current global health crisis continues to unfold and we look forward to a post-pandemic future, companies of all sizes will need seamless, unified digital payment services more than ever—and American Express will be there every step of the way, empowering companies with a modern, all-in-one approach that goes beyond the card and boosts efficiency, minimizes complexity, and unlocks new and meaningful opportunities.
