Overcoming Payment Digitization Challenges

Aug 16, 2023 by Zazil Martinez

In an era where technology reshapes everyday activities, a profound transformation in financial transactions is no surprise. Traditional payment methods relied heavily on cash and paper-based processes but gave way to a new digital frontier. This wave of digitization brings countless opportunities, yet it has its share of challenges.

Payment digitization challenges stem from internal and external pressures, and with the B2B payments landscape shifting, organizations need help to adapt. The last thing a CFO wants is to invest in new digital solutions and train the team, only for their new software to shut down or change to another within a year.

As we embark into the digital finance era, we face questions demanding thoughtful consideration and strategic planning. How do we ensure the security and privacy of sensitive financial data in an increasingly interconnected world? What measures must be taken to bridge the gap between tech-savvy individuals and those still adapting to digital platforms? How can businesses and financial institutions collaborate to create a seamless payment ecosystem?

This article will cover some of the biggest challenges of payment digitization today and how to overcome them.


Challenge: Convincing Management

Businesses often use different software for accounting and finance management. Making them work smoothly with the new digital payment system can be challenging and might create concerns.

And selling the cost of the digital transformation to other executives or team members can be difficult, especially during lean economic periods. But it's not impossible. Stressing the eventual cost-reduction of digital payments and the benefits to compliance and customer acquisition can help.

When pitching a solution for a more efficient payment solution, it's helpful to calculate the following:

  • How fast company can get its revenue with the software versus without it
  • Long-term savings that outweigh the costs
  • Potential security measures that will reduce compliance breaches
  • The long-term positive effect of cash flow
  • The potential for a more robust customer experience and repeated business

The results from upgrading payment systems are not just a competitive edge. It's a survival strategy during leaner years.


Challenge: Tackling the Skill Upgrade

When moving towards digital payments and modernizing the AR process, the real challenge often lies within the team handling these changes. The AR team needs to rethink and reshape their established methods to fit the new digital solution.

Some companies keep switching between different payment providers to find the right fit. This leads to confusion among staff members, slowing down the process.

To make this transition smoother, you can:

  1. Collaborate with your team. Involve your team in the decision-making process to choose a suitable solution. Their input can bring valuable insights and ease the change.
  2. Integrate with existing systems. Opt for a solution that integrates with your existing ERP. This way, the new solution will feel familiar.
  3. Provide comprehensive training. This way, your team can confidently navigate the new digital tools and processes.

By focusing on these steps, you can help your team overcome the challenges of upskilling and transition smoothly into digital payment.


Challenge: Rising Fraud Concerns

Dealing with fraud is a significant hurdle when introducing new financial solutions. This problem keeps changing and getting bigger all the time. Various types of fraud include stealing identities, misusing funds, and tricking authorization. These risks can affect any payment system, particularly if there's a lot of human involvement in the process.

The fact is that human error can account for many accidents slowing down the payment process and breaking with compliance.

For example, an accounting professional may get an email from a customer they recognize, saying they've made a duplicate payment. They even have a screenshot of the two transactions. The accountant might not see the issue with a traditional, manual system and consider it a glitch. And they have too much to do to check every journal entry and detail. So they choose to refund the customer immediately.

But in the age of synthetic identities, it's plausible that no duplicate payment was made. The customer's identity could have been stolen. Or, in some cases, the employee is in on the scam.

Today, there are ways to limit fraud.

AR teams have a smart option: automating invoicing and payment reconciliation. This helps cut down on their tasks, making things smoother. Some tools can provide notarized receipts, check bank accounts immediately, keep critical data safe, and sync all info with your company's systems. This double approach helps protect against fraud and gives teams more time to look into strange transactions.


Challenge: End-to-End Strategy and Visibility

Even with a robust payment system, making reports and creating payment plans can be a chore. But embracing digital tools, especially automation, can help reduce the time spent doing the same tasks. Plus, it opens the door to a wealth of new data you can use.

Sending embedded payment links, letting customers handle payments, or automating reconciliation, helps AR professionals save time.

As a result, the finance team can then focus on more critical tasks, like strategy. Choosing a preferred payment method, adding convenience fees for the rest, deciding whether digital currency is worth accepting, and finding ways to speed up payments further are crucial to ensuring healthy cash flow.


Challenge: Lack of Cross-Border Payment Compatibility

Let's take a step back and consider the evolution of payment methods. A consistent challenge has been cross-border payments.

For a long time, expensive bank transfers were the only way to move money between countries. But these bank transfers come with problems—they're slow, costly, and vulnerable to fraud.

Thanks to electronic payments, many fintech leaders are finding ways to send money internationally as quickly as sending a payment through apps like Venmo. But, most of the solutions available are designed for individuals. Regarding B2B, the options often resemble a friendlier version of traditional bank transfers.

One of crypto's original appeals was the ability to send money anywhere in the world for a small fee, almost instantly, depending on the method.

Many businesses have stuck to traditional methods like bank wires and credit card payments to tackle this challenge. Others have begun to embrace digital currencies like cryptocurrency to enhance international transactions. However, alternative solutions exist for conducting transactions beyond local financial systems' limitations.

Using software that enables multi-currency collections with digital payments and subsidiaries offers extra assistance for accurate bookkeeping. You can also work with a solution interested in building links within their platform across borders through acquisition or partnerships.


Challenge: Complex e-Invoicing Regulation

Another payment digitization issue revolves around e-invoicing. Regulations on e-invoices vary from country to country, which, again, complicates cross-border payments. Many focus on government payments, which also extends to B2B payments. Within the United States, tax categories and calculations vary from state to state. It's critical to have accurate, immutable records to reduce the compliance burden.

On the AR side, the ability to create custom, automated invoices reduces friction and improves compliance. Working with compliance-driven solutions streamlines the process. Since regulations keep changing, your AR software will too, leaving you to focus on the important stuff.


Digitization Made Easy

Embracing payment digitization might seem like a challenging task, especially when it comes to convincing your team. Often, the biggest challenge is getting everyone on board. It's natural for people to resist change, especially if they're used to the old methods.

But the exciting part is that digitizing payments offers much more than just transferring tasks to a computer screen. Adopting the right digital platform allows you to say goodbye to most of the manual work and instead focus on strategic activities that drive your company forward.

When you look at the challenges that come with transition, it becomes clear that a digital solution that's user-friendly, compliant, and automated can simplify your journey.

At Paystand, we've made digital payments as friendly as apps like Venmo but tailored for B2B transactions. We seamlessly integrate with popular ERPs like NetSuite, Sage, and more.

If you're curious about how we can make your transition smoother, look at our case study. Discover how Edgewood Healthcare slashed manual errors by 99%, reduced DSO by 60%, and cut transaction fees by 66%. Your journey to seamless digital payments starts here!