Overcome 7 Payment Strategy Hurdles

A successful payment strategy begins with understanding the pros and cons of the available B2B payment options, and determining which option is best for different types of purchases and suppliers. Your organization can reap ample rewards, such as reduced costs, increased efficiencies, and minimized risk—to name just a few. Yet, hurdles to payment strategy success can occur at any stage: buy-in, development, implementation, and ongoing management. Where does your organization stand? Following are seven hurdles you might experience, along with suggestions for overcoming them.

Buy-in Hurdles

1. Lack of Leadership

It usually takes an executive champion to spearhead change and, often times, senior management is focused on other business aspects, like sales. They might view the development of a payment strategy as unnecessary unless bills are not getting paid. See related content: The Payments Iceberg: Innovation and Realities.

To get their attention, create a compelling business case for a payment strategy—one that documents the costs and risks of what you are doing today (hint: start with your check usage), and how a strategic approach can literally pay off.

2. Turf Wars

Procurement and accounts payable (AP) fulfill important roles related to a payment strategy. However, we know that, in many organizations, these two groups fail to communicate. They might be possessive about their respective tasks, fearing job loss or job changes that take them out of their comfort zones.

Bring the stakeholder departments together, which might require a management-level initiative, to discuss their concerns and the benefits of a payment strategy. Everyone should be willing to support the organization’s goals over their own interests. Further, everyone will come out looking better through collaboration.

Development Hurdles

3. Lack of Knowledge

Even when your organization is ready to move forward with developing a payment strategy, it can fall short if internal knowledge is lacking. As noted in the introduction, understanding the pros and cons of different options is critical to success. Seek the necessary education and be receptive to hearing what different providers have to say.

4. Undefined Parameters

The process for divvying up purchases/suppliers can become random, leading to missed opportunities. Supplier X has requested checks, so we’ll keep them in that lane. Not so fast.

Identify the factors that should drive payment-related decisions. What is most important to your organization—cost, fraud risk, ease of use, etc.? Allow the priorities to guide the decision making. Further, do not automatically sign up new suppliers for ACH payments, which can interfere with card-related goals. Definitely incorporate ACH into your strategy, but do so mindfully.

Implementation Hurdles

5. Limited Resources

This hurdle can enter the picture at any stage, but is especially common once decisions are made. It might take a team of people to contact suppliers, update any existing payment-related contract terms, clean up the master vendor file, communicate the payment strategy (or payment policy) internally, etc.

Team members need appropriate time to work on the tasks, which could mean shuffling around their other duties at least temporarily. Document the roles, responsibilities, and a timeline. Keep everyone accountable. Also, take advantage of any assistance offered by your provider partners.  

6. Lack of Communication

Failure is a notable risk if no one knows the payment strategy/policy exists. Strive to communicate various ways, including conducting brief meetings with departments. Keep the communication going through ongoing employee training.

Ongoing Management Hurdle

7. No Follow Up

All the work involved with implementing a payment strategy can go to waste if no one monitors whether things are going as planned. Do not keep paying a supplier via check if they agreed to an electronic payment method. Someone needs to be responsible for monitoring the progress and taking action if the strategy gets off track.

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Overcoming the hurdles to payment strategy success leads to organization rewards. (Photo by Interactive Sports on  Unsplash ).

Overcoming the hurdles to payment strategy success leads to organization rewards. (Photo by Interactive Sports on Unsplash).

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About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

Are U.S. Card Programs Focused on the Wrong Things?

Sometimes it is hard to know what we are missing unless we look beyond our own borders. In the United States, we often focus on just one or two benefits of Commercial Cards, such as revenue share, and lose sight of the valuable big picture. Not so in other countries, as described below in the article by Mark Silverman, PayTech Group, What the U.S. Commercial Card Market Can Learn from the Rest of the World. Recharged Education invited Mark to share some of his vast global insights, so we can all broaden our horizons and, in the process, strengthen our card programs.

What the U.S. Commercial Card Market Can Learn from the Rest of the World

by Mark Silverman, PayTech Group

U.S. commercial card usage, both for physical cards and virtual cards, continues to grow at a healthy pace year over year. The marketing of these product lines in the United States relies heavily on two factors:

  • The dominance of checks, which are perceived to have fewer advantages than card-based solutions, in the B2B payment space (roughly 50% of all U.S. business-related payments are still made by check)

  • The continued reliance on aggressive rebate/revenue share back to the end-user organization

What’s interesting is that these are two advantages that most other commercial markets in the world are not able to take advantage of. In many if not most European markets, the dominant B2B payment methods are already electronic, not check based. And the financial incentives that corporates receive in markets outside North America are nowhere near the 100+ basis point levels seen in the United States. The pillars for success in these global markets include:

  1. A focus on capturing transactions versus volume ($) 

    Without the ability to look primarily at card programs as having a straight financial benefit, the value then shifts to other benefits that are more volume agnostic like compliance (e.g., travel/purchasing policy) and fraud mitigation, where the benefits of capturing a small transaction via card are equal to a big-ticket item.

  2. More emphasis on T&E 

    Similarly, in the U.S. where rebates are king, there is often an emphasis—both from buyers and sellers of card programs—on big-ticket payables when it comes to implementing a card program. Conversely, in other markets like Europe, T&E card programs have not lost their prominence in relation to AP spend.

  3. Marketing of card programs as a technology solution   

    This is also related to overseas providers’ inability to sell card programs purely as a rebate-centric solution to the end-user. For payables-based solutions, these companies have to rely on other benefits and, in most cases, especially among FinTechs, the way these offerings are marketed often revolve around their respective technology.

Similar to other industries, in commercial payments the U.S. is often seen as somewhat of a front runner. Yet as regulatory and market pressures here continue, the U.S. might be best served to look abroad to “future proof” the marketing and selling and buying, of commercial payment solutions.


About the Author

Mark Silverman is a Senior Consultant at PayTech Group, a payments advisory and consulting firm, specializing in helping both issuers and buyers of commercial payments via engagements ranging from sales effectiveness to research to vendor selection. He has shared his expertise in commercial payments while chairing and moderating panels at payments conferences sponsored by EuroFinance and NAPCP. Prior to consulting Mark spent several years at both American Express and U.S. Bank in a variety of leadership, business development and marketing roles. Mark can be reached at mark@paytech.no.

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Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. 

The Payments Iceberg: Innovation and Realities

In the 1970s, anthropologist Edward Hall developed the iceberg model of culture to express how visible aspects like fine arts are dwarfed by what is hidden below the surface (e.g., relationships, attitudes, approaches). The concept could be applied to the payments industry as well. This month, while at the Cards and Payments on Campus Conference by PDG, I attended sessions about emerging technology that dazzle the mind and represent the tip of the iceberg. There are lots of great things happening. Yet, I also encountered—as I do every time I am at an event—challenges that have plagued end-user organizations for decades. It’s the reality that sits solidly under water. As a result, I have formed three conclusions, as outlined below. Take a look and see what you think. I welcome comments and always enjoy hearing different perspectives.

Three Conclusions

  1. Innovation has multiple personalities.  
  2. Gaps between different entities keep getting bigger.
  3. Payments do not always make the priority list. 

The Multiple Personalities of Innovation

At the conference, Matt Dill of Visa addressed the future of payments. Some advancements, like Amazon Go (“a new kind of store with no checkout required”), perfectly illustrate how innovation can be baffling, appealing, and necessary all at once. We may not always understand how something works, but we think it is cool. The practical, necessary side of innovation include factors like payment convenience and security. Payments have to seamlessly mesh with our ever-expanding, technology-driven world. Innovation will continue. It’s exciting.

Widening Gaps

I heard attendees ooh and aah over what Matt showed. Then, during Q&A at the end, some questions pertained to longstanding struggles end-user organizations have (e.g., trying to pay remotely for the hotel stay of a traveling employee and hotels requiring a copy/photo of the card). Throughout the conference, end-users shared the same types of challenges that I heard 15 years ago.

On one hand, technology is soaring. On the other hand, some organizations have not changed anything about their payment strategy in decades. Providers have solutions for common challenges, but some organizations are not pursuing them. The gaps are widening, which leads to the last point.

Payments Do Not Always Make the Priority List

In many cases, executives within end-user organizations have too many initiatives to manage and sales goals to meet. No one has time to address something if it is not absolutely broken, so B2B checks remain. Checks are costly and inefficient, but, as some execs would argue, they get the job done. 

Real, across-the-board change will not occur within the end-user community until there is an overhaul of decision makers. We need more leaders who: 1) embrace payments innovation at a consumer level, and 2) see the value in similarly aligning B2B payments. Finally, the decision makers need to be at industry conferences to see what is possible. 

See more about payment strategies.

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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