In 2021, expectations and demands for payments transformed. The COVID-19 pandemic continued to heighten the need for streamlined digital processes and accelerate the transition to them. In addition, an already existent “on-demand” culture further propelled the payments industry toward faster, more efficient payments. This evolution is perhaps most clearly seen through the increase in demand for instant payments. This increased demand for instant payments has energized desire for similar transformation in B2B payments, which – to date – are still largely reliant on manual processes. With the drawbacks of manual processing and a payments environment rapidly evolving with increased digitalization, now is the time to modernize B2B payments.
To catalyze this transformation, the Fed is collaborating with diverse industry stakeholders to leverage the momentum for B2B payments modernization. Over the year, this collaboration and commitment to advancing understanding of the importance of B2B payments modernization has taken different forms, resulting in progress among industry work groups, market pilot activities, and strong enthusiasm for efforts to advance modernization. Highlights of this progress include:
Industry Awareness & Education
B2B payments have an opportunity to evolve through the adoption of modern, electronic processes, and this past year, the Fed has worked to provide industry stakeholders with a robust understanding of the opportunities, efforts, and momentum for B2B payments modernization.
The primary challenge of manual processing of B2B payments is the lack of connectivity between businesses to exchange payment information for automated processing. Yet, the B2B electronic exchange framework holds potential to result in more modernized processes. Once established, the exchange framework is expected to be the solution to support the exchange of electronic invoices (e-invoices), remittance information and more.
This modernization will lead to many benefits, including more efficient payments processes for businesses of all types. Through increased efficiency, businesses can expect better cash management, lower costs, error reduction, risk mitigation, and the increased transparency that comes with an electronic, automated process.
Learn more about the benefits that modernized B2B payments bring to businesses of all kinds and how you can get involved in current industry efforts to advance this innovation with the below online resources.
- Explore a recent webinar recap: “Modernizing B2B Payments: The Time for Digitalization is Now”
- Watch an educational video series on B2B payments modernization:
- Stay up to date on payments efficiency initiatives by reading recent blog articles on payments efficiency.
Industry Engagement & Action
Earlier this year, the Business Payments Coalition (BPC) achieved a major milestone towards realizing an e-invoice exchange framework for the U.S., through the successful completion of a proof of concept (POC) of a federated registry services model for the U.S. e-invoice exchange framework (Off-site). The POC demonstrates a path forward to creating an electronic delivery channel for the e-invoice exchange framework and is a significant step towards automating invoice exchange in the United States.
Building on this progress, in October, the Federal Reserve and the BPC announced two industry efforts aimed at catalyzing the modernization of B2B payments in the United States through the establishment of greater B2B connectivity through exchange frameworks. The commitment to these work efforts by organizations across the industry is evidence of a strong desire to modernize B2B payment processes.
The E-invoice Exchange Market Pilot is centered on advancing the development, testing, implementation and interim oversight of the U.S. e-invoice exchange framework. Similarly, the Remittance Delivery Assessment Work Group is working to determine the viability of applying the e-invoice exchange framework core components to establish the exchange of electronic remittance information across all payment types.
The E-invoice Exchange Market Pilot and Remittance Delivery Assessment Work Group will continue to drive innovation of electronic B2B payment processes in the United States through their work in 2022.
With such strong momentum for modernizing B2B payments, the industry and Fed are energized to further catalyze innovation and modernization in 2022. Get involved with this important and cutting-edge work! Join the FedPayments Improvement Community (select “E-invoicing” and “Electronic Payments and Remittance” under the interest preferences), and follow FedPayments Improvement on LinkedIn (Off-site) and Twitter (Off-site).