Overcoming the biggest hurdles in B2B payments for medical equipment & supplies
The work of medical suppliers is essential — especially now. But the B2B payment challenges that have dogged the industry for years are only getting tougher. Billtrust, the leading innovator in A/R automation is committed to helping medical suppliers overcome their A/R challenges so that they can focus on their life saving work.
We’ve been observing the activity of Business Payments Network (BPN), Billtrust’s supplier-driven payments network (launched in collaboration with Visa) that allows suppliers to automate their third-party payments quickly and economically, and we’ve spotted several trends directly affecting medical suppliers:
1. The growing adoption of A/P providers
The inefficiencies of paper check payments are well known. But the major payments challenge to medical suppliers has been the rise of the A/P provider and the growing set of healthcare providers that have adopted their procure-to-pay suites.
Billtrust predicts that as organizations adjust to the needs of a remote workforce, the A/P portal will become an even more dominant payment channel.
A/P providers aim to enroll suppliers in their unique programs to be able to submit payments. This has resulted in a greater push for card payments, and in some cases incentivizing suppliers with faster payments if cards are accepted.
Many A/P providers are also credit card issuers themselves or partner with issuers who make money on interchange fees and incentivize buyers with rebates. As A/P providers gain market share with the large healthcare providers, suppliers face enormous pressure to accept for fear of losing their customers.
And, in a field governed by HIPAA regulations, where data security is taken very seriously, suppliers are still receiving card data over the phone, fax and email — all of which expose sensitive card numbers to their employees.
2. High volumes and high fees
Suppliers are being paid in high volumes with hefty interchange fees that cut into the bottom line.
Billtrust’s BPN gives us unique insight into the situation. In BPN, medical payments are 100x the average ticket size of other verticals, with payments averaging $230,000.
Most of our medical supplier customers were paying high interchange fees before they joined BPN. Their average interchange fee per payment was 2.5%–2.6% — that’s $5,290 per payment in fees.
3. Mergers and acquisitions in the healthcare space
The medical space is well known for constant acquisitions and consolidations. But, in order to maintain long-term relationships, many acquired institutions still do business as their former selves. These complex parent / child relationships along with buying groups spread across hospitals lead to a lot of cash application work for medical suppliers.
Single, large payments meant to pay off multiple invoices across multiple entities are often delivered without adequate remittance advice. A/R teams then have to understand and unwind these payments as quickly as possible to maintain cash flow and replenish customer credit.
The Solution: Better cash flow through automation
Because it is typical in the world of B2B payments to see very large transactions paying off many invoices across multiple business units, even the fastest and cheapest form of payment is still painful without automation. But some fintechs are successfully driving a shift in the market by creating digital solutions that balance the evolving needs of the entire healthcare payment value chain.
Billtrust is leading the charge with our payments solution: BPN. BPN connects the procure-to-pay suites of medical buyers with our automated order-to-cash solutions that we provide for our supplier customers. BPN enables suppliers to benefit from the speed of payment that AP digitization provides while keeping the cost of acceptance to a minimum.
With Billtrust, suppliers can aggregate and automatically process card payments via email, phone and fax. Billtrust captures rich remittance and reconciles against your open A/R invoices. We’ve partnered with A/P providers to deliver touchless, automated 3rd party payments. Employee exposure to sensitive data is eliminated. And rich remittance significantly reduces processing costs with level 2 and level 3 processing. The effective rate of the Billtrust portfolio of acquiring customers is 2%, a reduction of interchange fees by nearly a full percentage point.
BPN has seen extraordinary success automating the payments of medical suppliers, with 58% of the payment volume on the network going to medical suppliers even though they only represent 25% of the suppliers on the platform.
Optimization is now more important than ever
The COVID-19 pandemic and wide-spread disruption to both the medical field and the wider economy has required medical suppliers to work more efficiently than ever before. Supply sales in certain categories are up, in some cases, more than 1000% according to several Billtrust customers. Other categories have seen depressed sales, and manufacturers have responded by quickly pivoting their operations to support the global medical effort. Overall, nearly half of all medical suppliers using Billtrust’s BPN platform have experienced a surge in electronic payments volume of 30%–70% from Feb–Mar 2020 with that trend continuing in April.
Andrew Cuomo, the governor of New York State, has reported spending over $2 billion on medical supplies this year. He has estimated that members of a new multi-state buying consortium will purchase nearly $5 billion this year.
This massive influx of sales along with disruptions to planning and operations necessitates the most efficient A/R processes possible. A/R automation will play a key role in reducing manual tasks and enabling professionals to focus on more essential initiatives. Automation also helps ensure employee safety by facilitating the performance of A/R tasks in the remote environment.
Billtrust is here to help medical equipment & supplies manufacturers perform their essential role by automating many of their A/R tasks, empowering remote workers and driving efficiencies that protect the bottom lines of these vital suppliers.
To learn more about how Billtrust can support your business, email [email protected].