Generative AI for corporate buying: Quick win or longer quest?
The way businesses are handling the payment process for corporate purchases today is changing. Fast.
A traditional business-to-business (B2B) payment process no longer does the trick: a fast and future-proof process in the long term that prevents any wasting of time and money has become a top priority.
The challenges?
Keeping track of the vast offering of technology and AI, knowing what to apply to make processes more effective and efficient, and making the required changes. After all, denying these technological developments is no longer an option.
But where to start? Does the whole end-to-end process need a thorough makeover process to see results, or can you start in a specific area for a quick win? Where has technology already entered the B2B payment arena in the first place?
Let’s find our way through the woods.
Traditional B2B payment challenges
Many companies rely on traditional payment processes as far as their history goes. The way things have been done in the B2B payments space inherently relies on decades-old technology and in some regions of the world still 18th-century innovations like the paper check.
These longstanding commercial payment methods have created a situation of passiveness. While legacy systems, often dating back to the pre-digital era, tend to work “just fine”, they were designed for a different business standard. They struggle to keep pace with the speed and efficiency required today. [1]
The promising innovations of the current century and the appeal of digital functionalities are starting to help get things into motion and the right mindset. Because when it comes to B2B payment innovation, it’s time to start acting on it.
For this, participation is required from both sides of the purchase: the buyers and the suppliers.
The buyer-supplier relationship for payments
While B2B payment services have previously prioritized buyers — today there’s an increasing focus on providing value to suppliers, including accelerated payments. It’s said to be the result of significant progress made to digitize B2B payments and embrace card-enabled transactions in recent years.
In this light, we can distinguish wire transfers from credit cards and digital transactions for payment lines.
Wire transfers are merely an instrument to move money from one place to another. They are different from credit cards and digital payment methods that are considered working capital tools: their supplier acceptance enables cash flow optimization on both sides of the equation.
Despite significant progress in the adoption of digital payment methods, many companies still have a way to go to strengthen buyer-supplier relationships, mainly due to the many different suppliers in the database as well as the friction created by the range of different approaches targeting the same processes.
To identify areas where modernization is needed to achieve a more comprehensive overview and controlled process, companies must do an extensive review of their existing IT infrastructure. Software integration solutions, application programming interfaces (APIs), and cloud-based platform providers can play a decisive role in bridging the gap between old and new, fostering a more streamlined and efficient B2B payments ecosystem. [1]
To properly recognize the benefits of adopting a platform-based and holistic strategy, education for CFOs, CPOs, and other finance executives is of the essence here. Once they know their suppliers and in which vertical to categorize them, the way is paved for successful process streamlining. This significantly improves cash flow management, as all the same suppliers are used, and all are dealing with the same types of purchases. [2]
When measuring the mood on automation among European purchasing managers in the latest AirPlus survey, most companies have already made or plan to invest in automating processes via digital platforms or software modules — in various application areas. Accounts Payable, Fraud Prevention/Risk Management, Procurement, Accounts Receivable, and Working Capital and Credit all achieved approval ratings between 80 and just under 70 % (listed in descending order).
In the context of payment transactions, various topics are of particular concern to companies. First and foremost, these are:
- Minimizing risk (cited by 34%)
- Simplifying the ordering and payment process for employees so they can focus on their core tasks (25%) and
- Optimizing payment deadlines compared to invoices (25%). [3]
For suppliers, the ability to retain and attract customers in today’s fast-paced digital world will require reimagining the B2B accounts receivable process with consumer-driven insights. Because as consumers, so much has changed around the purchase experience while for businesses, that experience is often stuck in the same manual processes as 20, or 30 years ago.
It will take considering B2B buyers as “consumers” and shifting focus from simply attracting and maintaining customers and generating revenue sales to help B2B suppliers stand out from the competition.
Generative AI: speaking solution language
That automation increases efficiency, is illustrated by the findings from a recent PYMNTS study [4] in which 93% of chief financial officers reported reduced days of delay in how invoices are tracked when automating accounts payable (AP) processes, with all CFOs seeing the need for AP and Accounts Receivables (AR) automation.
Besides digitalization through platform-based and software-based solutions, AI technology, along with machine learning (ML), has been of importance for years for powering back-end systems and innovative products.
What has been fundamentally changing in 2023, is the redefinition of AI with generative AI. [5]
Generative AI is about machine learning systems generating the content, often in response to a user-entered prompt. In other words, it integrates natural language processing (NLP) with standard AI functionalities.
Generative AI has a transforming effect across the payment landscape as it changes payment activities using language in various forms and channels. While the technology to detect fraud or deviations and make forecasts, as well as recommendations, has existed for some time now — generative AI is completing that technology as a human-centric interface. It knows how to write, how to communicate, and how to generate content.
The role of generative AI is more and more an incentive for further innovation by businesses to reach an even greater efficiency, accuracy, and security in their financial transactions,
Generative AI has machine learning algorithms for example that analyze and extract relevant information from invoices, significantly reducing the time and resources spent on manual data entry, while automated invoicing systems can streamline workflows, minimize errors, and accelerate the entire invoicing lifecycle.
AI and the power of data
Businesses can concentrate on more strategic tasks thanks to the ease of use and adaptability of AI to enhance workflows, as a valuable addition to the technology already in use.
There are several areas in which your business can apply AI for immediate wins. Customer support, sales, marketing, and the detection of deviating payments for example. By streamlining processes and reducing manual costs, businesses can leverage AI to enhance efficiency and decision-making.
Once a quick win has been achieved, from there, building the infrastructure and expanding into more complicated workflows is easier. The deeper into the data ecosystem you go, the more and more cross-domain and cross-functional applications of AI could prove to have an increasing impact on your business processes.
Still, caution is advised here. Rushing headfirst into these new opportunities is not the best idea: the machine learning models still need to be properly tailored to your business first.
This is about security parameters, the IT foundation. How do you feed data to a language model? How do you fine-tune it, and give it the context? A lot of engineering needs to be done.
Data fragmentation has been an issue long before AI existed. This means that getting the company’s data sorted is always your first careful step.
Most companies will not be able to build their foundational models by themselves — there’s a lot of power in those from OpenAI or Google. Therefore — especially with those areas in mind where you don’t need AI — it’s crucial to be aware of what data can or can’t be shared between those third parties, and how those interact.
Organizations must align their workforce to become proficient in providing context to AI models and to train domain-specific AI systems on their domain-specific data.
This can be challenging. Therefore, knowing which performance results you want to achieve and from that comparing the current IT tools against the desired development journey — which includes engineering and data layers — is key. [4]
Generative AI: turning the tides for B2B buying
CFOs, treasurers, and other finance executives are re-assessing the benefits of technology and what it can do for them, moving beyond the borders of simply cutting down on buyers making traditional payments and suppliers waiting for them to arrive.
And amid the current, a lot of interest occurs in the marketplace around the question of turning payment methods into “money makers” instead of just “money movers”.
Finance professionals are weighing the costs of issuing and accepting traditional payment methods like wire transfers versus other faster (and online) payment options such as virtual credit cards. [6]
Digital solutions such as automation are breaking down traditional barriers in the B2B journey and facilitating smoother transactions for both buyers and suppliers.
The ability of generative AI to bring in the communication element to rectify inaccuracies, and refine search criteria and outcomes, holds the potential to reshape product data management in the B2B space, leading to increased efficiency and enhanced commercial customer experiences.
To apply generative AI, it’s crucial for businesses like yours to thoroughly assess its impact and substantiate its actual value to ensure that it is driving to the anticipated key performance indicators. This focus will make generative AI useful instead of a hype that eventually ends.
Because as the payments landscape evolves, the integration of AI is not just a possibility, it’s an inevitability.
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At AirPlus, we offer B2B payment solutions and work together with a vast network of technology and platform partners to optimize payment processes for 53,000 corporate customers worldwide. Get in touch to learn more about how to best optimize your payment process.
[1] Automating Away B2B Payment Frictions: Goodbye Antiquity, Hello Agility | PYMNTS.com
[2] B2B Consumerization and Gen AI Needed to Unlock Potential of Buyer-Supplier Ecosystem, Experts Say | PYMNTS.com
[3] B2B payments survey | AirPlus
[4] CFOs automation AP AR workflows digital technology innovation | study PYMNTS
[5] Generative AI’s ‘New Electricity’ Sparks Innovation Across Payment Workflows | PYMNTS.com
[6] Businesses Shift From Paper Checks With AI, Faster Payments | PYMNTS.com
