Business-to-business payments are well behind the curve of payments automation, though there's signs activity is about to pick up.
Forrester predicts B2B E-commerce will pass $1 trillion in yearly volume by 2020, and a two-year-old Minneapolis-based company called Apruve is working to tap into that market with a mix of technology and liquidity tools to get businesses to shed manual processing and paper-based payments.
"You have to treat the business buyer differently than a consumer," said Michael Nobel, CEO and founder of Apruve. A business account's patterns, dollar amounts and types of purchases are entirely different than those of a consumer shopping on Amazon.com, he said. "Also, in business payments, people are usually not spending their own money."
These differences, and slow uptake of the needed technology in the banking industry, have kept B2B payments as a largely manual process, Nobel said. What's changing is the migration of catalogues that are used for procurement to websites, he said, adding that's creating a demand for an e-commerce-style ordering process as well as a need to manage how traditional corporate procurement fits into that model.
Apruve is attacking that niche in a couple of ways. It's working with financial services partners (which Apruve would not identify) to aid liquidity for businesses that sell products to other companies. Apruve manages tasks such as invoicing, payment reminders, tracking and other accounts receivable tasks. The client receives 85% of its receivables for a 30-day cycle within 24 hours, and Apruve receives the rest.
"That takes a huge burden off of their hands, all of the management that goes into those payments," Nobel said.
Apruve also offers a Stripe-style processing service for general payments. Apruve uses an API to integrate with e-commerce software companies such as Magento, Shopify and BigCommerce to connect buyers and sellers. It charges 2.9% of the transaction value plus 35 cents for each transaction.
Buyers that use Apruve choose from payment accounts during checkout, enabling them to charge purchases to a corporate account or route transactions to a superior for approval. Apruve also recommends complementary products, similar to a consumer e-commerce site.
Sellers can consolidate multiple invoices for individual buyers into a single monthly invoice, manage invoices for automatic replenishment of regularly ordered products and issue payment terms. Apruve also plans to offer automated credit approvals in the next year, Nobel said.
The size of the B2B market is attracting other companies that are looking to both speed up access to funds and automate processing. Taulia uses a Web-based portal to enable buyers and sellers to lower fees in exchange for faster payments. Among banks, BMO and RBC Citizens are active in B2B automation.
"In the form of an integrated payables or integrated receivables offer, automation gives corporates much better insight into their funds flow while enabling them to focus on the most important job of all, which is running the business," said Andy Schmidt, a principal at CEB TowerGroup.
Other payment companies offer direct lending to small businesses to aid liquidity. Square offers credit to consumers based on future payments. And PayPal also offers small loans to small businesses to speed liquidity or availability of funds for expansion.