Simplifying B2B procurement payments in emerging markets

With many businesses in emerging markets struggling to digitise B2B payment systems, what solutions are being developed to simplify processes?

SAP SE and Visa have recently announced a collaboration in the Asia-Pacific region to spread the effective adoption of B2B digital payments and commercial card acceptance.  

The collaboration will start in the Asia-Pacific market and will integrate payments into the SAP ecosystem through SAP Business Technology Platform and so speed up B2B payments in supply chains across the Asia-Pacific region.

“The movement of money is becoming increasingly digital, but the bulk of transformation has been focused on the consumer space,” said Stephen Karpin, Regional President, Asia Pacific, Visa. “Our collaboration with SAP is an exciting step in making B2B payments simpler and more intuitive as organisations can make payments immediately on SAP software platforms with their Visa corporate cards, instead of having to leave their existing enterprise ecosystem and navigate the different payment methods that their vendors accept. B2B payments need to be intuitive and fuss-free, so organisations can maximise time and resources on other aspects of their businesses.”

Embedded finance in the B2B market

This partnership between Visa and SAP marks the first time they are working together to explore embedded finance in the B2B market through SAP BTP. The aim is to offer convenient B2B payment services to SAP customers. Many businesses in Asia Pacific, particularly smaller ones, struggle to digitise B2B payment acceptance and cannot accept commercial card payments. Through this collaboration, the B2B payment services on SAP BTP will automate payments and help enterprises make secure payments with just a few clicks, improving efficiency in their purchasing processes.

“Our collaboration with Visa endeavours to streamline and simplify the B2B payment process and drive further efficiencies for our joint customers,” said Paul Marriott, President, Asia Pacific Japan, SAP. “Embedding Visa payment solutions into the SAP ecosystem aims to scale and accelerate digital commerce, together empowering enterprises – from small businesses to government agencies and nonprofit organisations – to make secure payments quickly, transforming the last mile of procurement.”

Solution expansion into further regions 

It is hoped that the solution will help to open up more vendors for procurement teams, and also eliminate the need for manual and time-consuming payment methods like cash and cheques, and so reducing processing time and increasing cash flow for both payers and suppliers.

Initially, the embedded finance solution will be available to SAP customers in Australia, India, Japan, Malaysia, Singapore, Thailand, and Vietnam. The plan is to expand its availability to other markets in the region.

The importance of working capital 

The importance of working capital in supply chain operations was recently explored in a paper from the Bank for International Settlements (BIS), which looked at the key role of working capital in determining supply chain length

The BIS is an international financial institution that’s owned by member central banks, and whose goal is to foster international monetary and financial cooperation while serving as a bank for central banks.

The paper studied the balancing act firms have to strike between offshoring and trade, as they strive for a sweet spot between the productivity gains of offshoring and the greater financial cost of longer supply chains. 

The BIS says that, when in balance, inventory and productivity “are procyclical and closely track financial conditions”.

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