As supply chains continue to recover from the effects of COVID-19, improving efficiencies across the entire process becomes paramount. At the core of this movement is the growing investment in digital technology.

Six out of 10 companies plan to invest in digital technology this year to bolster their supply chain processes, according to KPMG. At the same time, there’s a digital transformation taking place in the B2B payments industry that can contribute significantly to improved supply chain efficiency.

COVID-19 is credited with accelerating the digitization of companies by several years, if not decades. This expedited transformation has impacted many areas of business, including B2B payments, where companies are now seeing new cost and process efficiencies.

 The post-pandemic return of travel and expense cards came with tighter company controls. However, educating employees on new company policies is more difficult in today’s hybrid work environment, so companies want those controls baked right into the card. This allows employees to purchase what they need, with as little friction as possible, while making sure that is within company guidelines for spending limits, geographical restrictions, and merchant category code (MCC) designations.

When the pandemic hit, companies that moved from a centralized accounts-payable team to a decentralized organizational structure often turned to outside providers of finance technology to automate their payments process, rather than creating a new one with checks, or standing up an electronic payments program. This led to more automated clearing house (ACH) and virtual card payments. Fintechs come with rigorous fraud protection to reduce the burden on accounts-payable departments. Similarly, virtual card payments made in an outsourced cloud-based environment not only have fraud protection on single-swipe transactions, but also give companies working capital for longer periods of time and rebates on their spending.

The biggest hurdle for companies shifting to digital payments has always been enablement. Historically, this required working with each individual vendor to determine if they take ACH or card payments before negotiating terms, including spending limits and rebates. This ongoing process is a huge investment in time and labor. With this challenge in mind, payment automation fintechs have spent the last decade building large B2B networks of vendors enabled for ACH and card payments, so companies can easily make the transition to digital payments. These large B2B vendor networks open new opportunities for faster, more flexible and more accessible supply chain financing.

This exercise has always been a big lift in a paper-based payments world. Companies would have to negotiate terms with each vendor, and once an agreement is reached, the required funds must be sent to them on time. Instead, by partnering with one of the large B2B payment providers, they can leverage their vendor database to pay more vendors on a virtual card with terms, while earning a cash rebate.

Invoice financing has become much faster and easier. If an invoice-financing service provider knows when an invoice is approved to pay, it lowers the financing risk substantially. Once an invoice is approved and scheduled for payment to the vendor, there’s negligible risk in making a loan offer to that vendor. All the vendor/payee must do is accept the payment terms via the online portal based on the number of days financed. All this can be extremely flexible. Neither the company nor the vendor has to commit to a long-term program. The company can opt in anytime for a month, a week, or just for one large invoice. Expect to see more demand for this model as interest rates continue to rise, and companies have a harder time getting access to affordable financial solutions.

Payments are the lifeblood of supply chains. The pandemic accomplished in a year what might have taken a decade of sales and marketing efforts to get companies to adopt digital payments. This is a major evolution that reduces a big source of friction from the supply chain. With more digital payments and data flowing through large cloud-based vendor networks, it sets the stage for the next evolution for both B2B payments and their impact on supply chain efficiency around the world.

Sven Hinrichsen is president and general manager of AP automation at Corpay,