Seventh of 8 blogs in the series. Read previous blog.
Has your home recovered from the 1970s?
One of the most pernicious scourges to hit homeowners in the past 100 years was the paneling plague of the ’70s. This malady took over homes en masse when homeowners everywhere woke up one day to find their walls covered with faux wood paneling, their floors sprouting various colors of shag carpeting, and their appliances having turned a sickly shade of avocado green, “harvest” gold, or sunset orange.
In fact, it was quite likely the collective return to stylistic sanity and the desire to toss the ’70s onto the trash heap of history that led to the home improvement revolution of the past couple of decades.
So what in the world does this have to do with accounts payable? I’m glad you asked. Because while most of our homes have undergone the needed renovations to put the ’70s in the past, the payment systems that we depend on to settle commerce with our business partners have not.
The 1970s – a groovy time for B2B payment
Prior to the 1970s, the only way for a company to pay its suppliers was to cut checks and send them in the mail. This method was recognized even then to be horribly opaque, slow, and prone to fraud. As a result, electronic payment methods (such as ACH in the U.S.) were created and instituted, taking advantage of then cutting-edge technology to enable faster settlement of funds in a more secure environment, along with the delivery of a limited set of remittance data. Those limitations were due to the 80-column data format of the time, which was the standard in place since the 1928 advent of the 80-column computer punched card.
But in an era where bank account info and remittance data resided in Cobol-based mainframe computers that were physically situated within the walls of company buildings, completely disconnected from the outside world, these new forms of electronic payment, even with limited space for remittance data, were revolutionary… for the 1970s.
21st-century B2B payment realities: moving beyond a bygone era
Unfortunately, while B2B payment needs and business technology realities have changed dramatically in the last 40 years, the vast majority of B2B payments still rely on this same technology built to suit a bygone era, as the electronic payment systems used globally have not changed significantly since then.
In the 21st century, however, the digital economy enables companies to connect to their partners through business networks to exchange terabytes of data in real time. So the idea of extracting and sharing only a limited subset of that data with payment is as out of place as wood paneling and orange shag carpet in a modern home remodel!
And in an era of increased data breach risks, it makes no sense for companies to capture, manage, and maintain sensitive supplier bank information in their own servers, unless bank account maintenance is their core competency (which it most likely is not). Rather, in the digital economy, business networks provide an ecosystem for companies to tap into the strengths of best-in class providers to handle that for them.
Modernizing with certain, secure, and simple B2B payment
The time has come, as you complete your payables house remodel, to make the final upgrade from payment processes and systems built in the mainframe computer era to a B2B payment built for the digital economy.
Instead of 1970s payments that are opaque, risky, and complex, business network based B2B payment is certain, secure, and simple. With terabytes of real-time payments data being shared between known business partners, it is certain to all parties exactly who is being paid when and for what. And with a network ecosystem to connect you to best in class providers, you no longer ever have to touch sensitive bank information, thus removing risk and making your payments more secure than ever. Finally, with single portal access and a simple, clean user interface, it is simple for all parties to get the information they need when they need it.
So, when remodeling your accounts payable house, don’t go through all the work of modernizing the structure only to finish it off with a payment process built for another era. Get rid of the wood paneling and shag carpet once and for all, and bring your B2B payments into the digital economy.
Learn more about how to take your payables to the next level of performance in Ardent Partners’ research report E-Payables 2015: Higher Ground.