Over the years, the payments industry has made great strides to improve the efficiency of B2B payments, which historically have been highly manual, labor-intensive and costly. Modernizing the B2B payments process, including sending and receiving of remittance information, can help improve the entire payment system and offer strategic and efficiency benefits for businesses.
E-remittance Exchange Pilot Overview
Today, remittance information – details that describe what is being paid – frequently is provided separate from the payment, such as via email or portals, which often require manual processing. E-remittance information with structured data can help businesses automate their accounts receivable (AR) cash application processes, reduce payment costs and improve overall efficiency.
From September 2023 through June 2024, the BPC conducted an E-remittance Exchange Pilot with B2B service providers, financial institutions and business participants (Off-site). These industry participants came together to exchange e-remittance information via an electronic delivery network, known as an exchange framework.
An exchange framework is a virtual electronic delivery network based on a set of technical standards and policies that allows businesses to securely share electronic supply chain documents with anyone else on the network, independent of the platform, system or application. Pilot participants confirmed an exchange framework ecosystem can provide a seamless, digitized way for businesses to send and receive e-remittance information in a consistent format for all payment methods, including instant, ACH, card, wire and check payments. Further, connecting to an exchange framework allows businesses to send and receive remittance information in the same way they currently do, with minimal system change requirements.
This work effort built on the success of the BPC’s recent Remittance Delivery Work Group validation phase, where the work group successfully demonstrated the operational feasibility of an exchange framework to deliver e-remittance information.
E-remittance Data Model Now Available
The pilot confirmed that an exchange framework supports the sending, receiving and automation of e-remittance information, which moves the industry closer to achieving straight-through processing. Straight-through processing of business payments occurs when little to no manual intervention is required to process the invoice, payment and associated remittance information. This industry solution brings greater efficiency to the B2B payments process, and ultimately, the payments ecosystem.
Due to the pilot testing success, the e-remittance data model is now available for integration into existing exchange framework networks.
B2B service providers that participated in the pilot confirmed compatibility and efficiency benefits of automating e-remittance documents with an exchange framework. This is the future of B2B payments, as the rich data can drive modern solutions for straight-through processing and business intelligence analytics.
“I’d like to thank the E-remittance Exchange Pilot industry participants for their contributions to this important work effort. It is because of their collaborative commitment to creating a more efficient payment process that the U.S. now has a market-ready e-remittance data model that supports sending and receiving e-remittance information for B2B payments.”
Kassi Quimby, SVP and head of strategic industry engagement
Federal Reserve Financial Services
Next Step: Adoption of an Exchange Framework for E-remittance Information
To promote adopting an exchange framework for e-remittance information, the pilot participants published various resources for the broader B2B payments industry (Off-site). These include tools to bring awareness of the opportunities and benefits around more efficient B2B payments, educate trading partners and clients on how e-remittance information benefits all parties, and ultimately, support adoption of an exchange framework to send and receive e-remittance information.
Pilot participants also published an ISO® 20022 remittance data model and implementation reference guide, including common market practices that the industry can use to support e-remittance exchange. The data model, which is based on the X9 ISO 20022 Remittance Content Market Guide, can be used both within an exchange framework and/or for other purposes.
Find all E-remittance Exchange Pilot resources available for download on the BPC website (Off-site).
For more information on B2B payments efficiency, join the FedPayments Improvement Community (select “E-invoicing” and “Electronic Payments and Remittance” under the interest preferences) and visit the BPC website (Off-site).
“ISO” is a registered trademark of the International Organization for Standardization.