Implementing embedded finance into B2B commerce can help ensure that trade networks become stronger and more robust as economies worldwide seek green shoots of recovery and renewal.
FREMONT, CA: The emergence of embedded finance symbolizes today's emphasis on customer-centricity across many industries. Finance, banking, and payments are straddled in this concept to offer customers more flexibility and efficiency. An embedded finance solution integrates a financial solution into a business' infrastructure. Streamlining access to financial services like lending, insurance, or payment processing without redirecting customers. Financial services can therefore be integrated into a service provider's website or app so that the buyer does not have to enter their bank details manually when attempting to access a service. This system connects brands, customers, and financial solution providers.
Many of us rely on embedded finance technology without realizing it. Through embedded finance, consumer payments are evolving from ordering a coffee to paying for cabs through payment apps. Customer transactions can now be completed seamlessly on a single platform, simplifying the process. Embedded finance has generated intelligent, more efficient consumer services (B2C), but little innovation has occurred in business-to-business (B2B). For example, slow payments keep many businesses waiting weeks or months for payment. B2B commerce can now benefit from the premise of 'plugged in' financing systems well underway in B2C. Small and medium-sized businesses can benefit from embedded finance by dealing with slow payments and accelerating their recovery and growth.
Business payments streamlined
A slow and late payment process is a serious burden for suppliers and restricts the cash flow of small and medium-sized businesses. Many factors contribute to the slow and late payment crisis, and they don't just threaten small business growth but also the overall recovery of the global economy. The slow payment system prevents working capital from reaching every corner of the trade network. It robs suppliers of the funds they need to adapt to shortages and cost increases, which forces them to limit production. Supply chains must be able to get back up and run before the end of the year, as this prolongs the duration and the impact of delays and bottlenecks.
Incorporating embedded finance into B2B
When it comes to overcoming the slow and late payment problem, embedded finance is the most powerful tool B2B networks can leverage to transform the situation. Through machine learning, invoices likely to get paid can be identified and automatically paid based on past payment patterns. Suppliers can integrate payment processes across various platforms, including purchase-to-pay (P2P), enterprise resource planning (ERP), and payment systems. Incorporating instant payment technology into B2B trade benefits all parties. Suppliers can adapt to rising costs and invest in their business with instant cash flow. The process strengthens supply chains by enabling small suppliers to access markets they would otherwise be unable to reach.
Embedded finance has the potential to drive innovation in the future. Bringing business payments up to speed can unlock huge benefits in the B2B sector if we look at the trajectory of this technology. Embedded finance can help build more robust trade networks worldwide as economies seek green shoots of recovery and renewal.
