Amex: Traditional AP/AR Doesn’t Work For SMBs Any More

Amex: Traditional AP/AR Doesn’t Work For SMBs Any More

June 18, 2021 at 09:00AM

Businesses making late payments aren’t new, nor is the resulting threat to cash flow for small- and midsized business (SMB) buyers and suppliers. While those issues can be caused by a number of factors when a business pays bills late, it’s not always because it doesn’t have funds available — in many cases, it can simply be because of an operational issue.

In fact, there have been extreme operational issues in the 16 months of the pandemic, as American Express Executive Vice President of Global Commercial Payments Dean Henry told PYMNTS.

What American Express hears over and over from the businesses it works with, he said, is that their accounts payable (AP) departments are overwhelmed.

“There’s a small group of people trying to get through a large number of invoices in an accounts payable department, and they need solutions to pay in a more automated and easy way,” he said.

What SMB AP departments need, according to the most recent Amex/PYMNTS SMB optimization report, is more help in the form of technical tools that allow them to consolidate better and streamline their payments processes, rather than the inefficient and time-consuming process of trying to battle through one invoice at a time.

In fact, because this is such a big pain point, there is now heightened interest in digitizing and automating accounts receivable (AR) and AP functions at small and medium-sized firms. Nearly half of U.S. businesses surveyed said they are mostly or fully automating the making (48 percent) and receiving (51 percent) of payments from business customers. In addition, there is more opportunity ahead, as nearly half (46 percent) plan to automate or further automate each of these functions over the next 12 months.

Simply put, Henry said, Amex increasingly hears from businesses that they need a single-point solution, a platform from which they manage all their payments. That means being able to pay suppliers and vendors in a more automated, easy way. This is central to Amex’s strategy of providing business solutions beyond its payment cards — often digital, integrated solutions for SMBs.

The question SMB players are now demanding an answer to, he said, is how they can get a “consolidated view” of who they have to pay and when they have to pay, along with an offering of a full range of automatable choices in how they pay.

And by adding more visibility and a simplified process for AP departments, these solutions can, in turn, help reduce late payments.

Convenience And Trust 

Henry said in any form of payments for consumers or businesses, convenience and trust are overriding themes. And that is driving the push to automate AP/AR departments and create easy ways for buyers and suppliers to connect and transact.

That process, he said, must involve options — in terms of when a supplier gets paid, how much they are paid and, most importantly, push-button choice when it comes to how the payment itself gets made. The trend, Henry noted, is for businesses to opt toward virtual cards, which offer ancillary benefits around things like data, security and early payments. But more than offering choices on-trend, the bigger idea is to offer options in general, which builds that convenience and trust between buyers and suppliers.

“We see businesses that want to be paid by ACH and check because of the convenience or the familiarity of how they’ve been paid over time, and others that opt for card or virtual card payments because of the security features, tracking and ability to earn rewards,” Henry said. “Really, the trend we see is small businesses asking us if we can give them one platform, one solution that lets them pay anybody, anywhere in any form that they want.”

Adapting To A Changing World 

The explosion of digital has raised the bar for small businesses, Henry said, but it has also opened up opportunities that SMBs have never been able to access before. Businesses, for the first time, can be “born global,” he said, and geographies no longer have to be a limitation in a world where businesses have the opportunity to connect to partners on the other side of the world — if they can find the right platform to transact across.

American Express very much hopes to be that platform for its SMB partners, Henry said, and offer that holistic view they need to take on the world in 2021.

“We’re seeing these small businesses that historically have just sold within a common geography are now being asked by buyers of all sizes, ‘Can you integrate into my procurement platform? Can you accept a digital payment?’” he said. “Amex’s goal is to provide businesses of all sizes the ability to join the Amex network, creating a unifying end-to-end experience for both buyers and suppliers.”