Flint Lane, CEO, Billtrust

The business-to-business payments market has quietly been going through an incredible digital transformation that is affecting all players in the ecosystem, including accounts receivable and accounts payable departments, banks, credit card brands, payment processors and providers of software including enterprise resource planning systems for managing back-end business operations like financial records and customer accounts.

The B2B payments market, estimated at more than $38 trillion, is still dominated by paper checks, so the changes that we’ve seen already were inevitable. But we’re still early in the process, and there are significant changes still to come. Here are a few.

Virtual credit cards

Accounts payable (A/P) departments have been responsible for the majority of paper checks issued in the B2B payments space. Checks are expensive and inefficient for both sender and recipient, however they do still have certain advantages over all other payment methods. Namely, simplicity and universality. All you need is a billing address, and they are accepted by everybody across B2B payments.

The last five years have seen dramatic changes in A/P departments with the introduction of virtual credit cards. These “cards” aren’t physical—they’re one-time-use card numbers that are used to pay for goods and services. These have become popular with A/P departments, because it allows them to monetize their A/P spend in the form of interchange rebates. That’s something every chief financial officer wants to hear: how to turn an expense area into a revenue stream.

2018 will bring significant change to the other side of virtual credit cards—accounts receivable (A/R) departments. Virtual card issuers are starting to get significant pushback from A/R departments, because the way these payments are delivered is inefficient. They are most commonly sent via email with just partial numbers, and it requires extra work to log into websites, run the card payments and then post the remittance information. A/R departments started complaining, with some refusing to accept virtual card payments because of the inefficiency.

There’s too much at stake for this problem not to be solved, so expect A/P providers to work closely with A/R providers to streamline virtual card use.

Electronic adoption

Snail mail belongs in the 20th century, and it’s bad for the environment. This isn’t new information. More and more, however, businesses are feeling the need to respond to the customer’s desire for fast, efficient and easy services. Because of this, formulating an electronic adoption strategy is another trend to watch out for in 2018. It not only helps a business receive and process invoices faster, but it addresses customer demand.

A 2015 Institute of Finance Management survey found that 31% of businesses identified receiving fewer calls from customers regarding lost invoices as the biggest benefit of electronic adoption. The use of self-service portals in an electronic adoption strategy reduces the costs associated for a customer service team getting inundated with these types of low-value calls. Additionally, paper delivery can cost a company double the amount of electronic delivery. Moving these processes online saves postage, paper and printing costs—not to mention the time to manually complete those tasks.

In 2018 we can expect businesses to turn their focus inwards and finally bring their billing practices into the 21st century.

Going mobile

A third area to watch in 2018 is the growth in mobile transactions. According to Deloitte, the U.S. B2B payment market is growing at 5.8% compound annual growth rate. Mobile payments are a great way for companies to provide more convenient payment methods for their customers and create extra value. It’s long been a trend in the B2C world, but it is starting to catch on for B2B payments.

Industries such as transportation or food supply, where a driver might be in a position to accept an order and payment outside of a customer’s usual standing order, would benefit from the autonomy that a mobile solution provides. In this instance, the driver could accept the order and payment immediately. Companies will begin to roll out more mobile-friendly websites and payment portals for their customers, giving them even more flexibility and automation in the process.

Overall, 2018 is projected to be an exciting year in the B2B payments space. We can expect to see technologies continue to develop as the value of the B2B payment market is realized.

Flint Lane is the CEO and founder of Billtrust, a provider of cloud-based solution for automating invoice delivery, invoice payment and cash application. Follow him on Twitter @FlintLane and @Billtrust.