E-payment systems in B2B commerce: A supply Chain Management Perspective.Presentation. The payments industry has advanced remarkably during the last decade. With the new technologies and increasing mobility, payments can be realized much more efficiently, and the trend is growing rapidly. Advanced e-payment systems are not just helping current businesses to offer better service for their customers but also thanks to e-payments systems it is much easier to build a company from scratch, supply chain finance is much more manageable, sustainability is achieved on a completely different edge that companies willing introduce e-invoicing systems for their customers and much more. However, despite the new developments in the payments industry, for the business-to-business (B2B) transactions, the industry response in much slower compared to business-to-customer (B2C). Introducing electronic payment systems to B2B commerce is increasing visibility and connectivity as well as the simplicity of the transaction process, and this is a radical change for an industry whose major challenges are inefficiency and poor information. This paper is designed to present the compressive benefit analysis of electronic payment systems for B2B industries and motivations and possible barriers for its future applications in the industry. Resources are citated.

1. E-Payment Systems
in B2B Commerce: A
Supply Chain
Management Perspective
Merve Nur Taş
Supervisor of the Study Work: Dipl-Kfm. Michael Müller

2. Outline
• Objective of the Research
• Introduction
• Performance Metrics
• SWOT Analysis
•Industry Examples
•Conclusion and Future Analysis
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3. Objective of the Research
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B2C
Commerce
B2B
Commerce

4. Introduction
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4Source: 2016 APF Electronic Payments Survey, J.P. Morgan
Data includes 412 survey respondents in USA.

5. E-payments and Supply Chain
Performance Metrics I
In the book The Practice of Supply Chain Management, Hausman
considered three main dimensions while classifying the areas a supply
chain needs to perform in: Service, assets (inventory) and speed.
• Customer Service
• Assets (Inventory)
 Monetary Value
Monetary Value measures the Working Capital, which is the funds tied up
the inventory.
 Inventory Turnover
Inventory Turnover measures the value of inventory as an asset on the
firm's Balance Sheet.
• Speed
 Cash-to-Cash (C2C) Cycle
Measures the time between the cash outlay and the cash receipt.
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6. E-payments and Supply Chain
Performance Metrics II
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• Cash-to-Cash (C2C) Cycle (Cash Conversion Cycle)
• Inventory Turnover
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 = 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑 (𝐶𝑂𝐺𝑆) / 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐴𝑔𝑔𝑟𝑒𝑔𝑎𝑡𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑉𝑎𝑙𝑢𝑒 (𝐴𝐴𝐼𝑉)
• Working Capital = Current Assets - Current Liabilities
Cash Conversion
Cycle
(No. of Days AR + No. of Days Inventory) – No. of Days AP
No. of Days AR (Accounts Receivables/Sales) x 365
No. of Days AP (Accounts Payables/Cost of Goods Sold) x 365
No. of Days Inventory (Inventory/Cost of Goods Sold) x 365

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SWOT Analysis
E-payments in B2B Commerce

8. SWOT Analysis - Strengths
• Reduced Labor Costs
• Prevented Delays in Invoice Reconciliation
• Manual payment processes = Increased working capital
requirements
• Transparency & Efficiency
• Information Flow
• Better compliance and spending controls
• Real Time Updates
• Better Supplier Relationships
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9. SWOT Analysis - Weaknesses
• Subscription Requirements
• Processing and Transaction Fees
• Dependency on Connectivity
• Change Management
• Controversies regarding payment transactions
• Supplier Enablement
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10. SWOT Analysis - Opportunities
• Globalization
• Innovations and New Technology
• Move towards Cashless or fewer cash Economies
• Spreading of the e-payment platforms towards B2B
• Scalable data collection and secure storage
• Sustainability
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11. SWOT Analysis - Threats
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• Security Issues
• Hacking & Fraud
• Check Usage

12. Industry Examples
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• Dynamic Discounting (PrimeRevenue)
• GT Nexus Online Platform
• Escrow Service (Escrow.com)

13. Industry Examples
PrimeRevenue
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13Picture Source: http://www.ipayables.com/wp-content/uploads/2014/11/ipayables-dynamic-discounts.jpg
It is founded in 2003, and it processed more
than $100 billion in supplier transactions in
2016 through its cloud-enabled platform.
Working Principle of PrimeRevenue’s
Dynamic Discounting
1. Supplier sends the invoices.
2. Buyer approves the invoices and uploads
them to the cloud platform.
3. Supplier requests early payment from
the buyer or waits until the original
maturity date.
4. If the supplier requests early payment,
the full invoice value minus the
discount calculated is paid
electronically to the bank account of the
supplier.

14. Industry Examples
GT Nexus
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14Picture Source: http://www.gtnexus.com/solutions, http://www.scf-forum.com/uploads/1/0/7/8/10788161/gt-nexus-inforco-rgb-1200px_3_orig.png
• Procure-to-Pay Automation
Accounts Payable (AP) automation
98% touchless invoice processing
< 2 days to approve an invoice
Cash flow visibility (5- 25 days)
• Chargeback Automation
Accelerated chargeback recovery by
automated creation and workflow of
chargebacks and adjustments
• Invoice Discount Management
• Supply Chain Finance
• Supply Chain Intelligence
Complete cycle time analysis
Uptake of invoice discounting programs

15. Industry Examples
Escrow Service
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15Picture Source: https://s3-eu-west-1.amazonaws.com/tpd/logos/5844dc490000ff000598987c/0x0.png

16. Conclusions
• For years and years, companies tried to improve their supply chains for the
better.
• Payment is a fragile process for many businesses, and especially small
businesses may find it hard to adjust the time and the investment for the
change in the system.
• But the change is not just led by the companies.
• Emerging service providers for B2B transactions, new products of traditional
banks, and increasing number of literature about the subject shows that the
industry is growing, even though it is growing in a slow pace.
• It is safe to say that, maybe for a couple more years, switching to an automated
e-payment system for businesses will stay optional, but after a while, it will be
inevitable as it happened with B2C payments.
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17. References I
• AFP, & Morgan, J. (2016). 2016 AFP Electronic Payments Survey. Bethesda, Maryland: Association for Financial
Professionals.
• BKM, & Burnmark. (2017). Cashless Turkey by 2023. BKM; Burnmark. Retrieved from http://bkm.com.tr/wp-
content/uploads/2017/05/cashless-2023.pdf
• California Department of Business Oversight. (2017). Retrieved from California Department of Business Oversight:
https://docqnet.dbo.ca.gov/LicenseSearch/LicenseDetails/
• Deloof, M. (2003). Does Working Capital Management affect Profitability of Belgian Firms? Journal of Business Finance
and Accounting, 573-587.
• Ericsson. (2017). Ericsson Mobility Report. Stockholm: Ericsson. Retrieved from
https://www.ericsson.com/assets/local/mobility-report/documents/2017/ericsson-mobility-report-june-2017.pdf
• escrow.com. (2017). Retrieved from escrow.com: https://www.escrow.com/fee-calculator
• escrow.com. (2017). Retrieved from escrow.com: https://www.escrow.com/support/faqs/who-is-responsible-for-paying-the-
escrow-fees-to-escrowcom
• European Central Bank. (2014). Third Report on Card Fraud. Frankfurt am Main: European Central Bank.
• Gelsomino, L. M., Mangiaracina, R., Perego, A., & Tumino, A. (2016). Supply Chain Finance: Modelling a Dynamic
Discounting Programme. Journal of Advanced Management Science (Vol. 4, No. 4), 283-291.
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18. References II
• Gill, A., Biger, N., & Mathur, N. (2010). The relationship between working capital management and
profitability: Evidence from the United States. Business and Economics Journal, 10(1), 1-9.
• GSMA. (2017). The Mobile Economy. Retrieved from
https://www.gsmaintelligence.com/research/?file=9e927fd6896724e7b26f33f61db5b9d5&download
• Padachi, K. (2006). Trends in Working Capital Management and its Impact on Firms’ Performance: An
Analysis of Mauritian Small Manufacturing Firms. International Review of Business Research Papers, 46-
58.
• gtnexus.com. (2017). Retrieved from gtnexus.com: http://www.gtnexus.com/about
• Gtnexus.com. (2017). Retrieved from Gtnexus.com: http://www.gtnexus.com/solutions/procure-pay
• Harrison, T. P., Lee, H. L., & Neale, J. J. (2004). The Practice of Supply Chain Management: Where Theory
and Application Converge. New York, New York, USA: Springer Science+Business Media, Inc.
• Hausman, W. H. (2014). Chapter 4: Supply Chain Performance Metrics. In T. P. Harrison, H. L. Lee, & J.
J. Neale, The Practice of Supply Chain Management (pp. 62-73).
• Hofmann, D. E., & Belin, O. (2011). Supply Chain Finance Solutions: Relevance - Propositions - Market
Value. Springer Science & Business Media.
• Investopedia. (2017). Investopedia. Retrieved December 2017, from Investopedia:
https://www.investopedia.com/terms/w/workingcapital.asp#ixzz51ZaJztI3
• investopedia.com. (2017). Retrieved from investopedia.com: https://www.investopedia.com/terms/c/chargecard.asp
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19. References III
• Jarvis, R., Kitching, J., Curran, J., & Lightfoot, G. (1996). The financial management of small firms: an alternative
perspective. RESEARCH REPORT-CHARTERED ASSOCIATION OF CERTIFIED ACCOUNTANTS. Retrieved from
https://www.researchgate.net/profile/John_Kitching/publication/38176484_The_Financial_Management_of_Small_Firms_An_
Alternative_Perspective/links/5857dab608ae64cb3d47c848/The-Financial-Management-of-Small-Firms-An-Alternative-
Perspective.pdf
• Jung, I. Y., & Jang, G. J. (2014). A Secure and Reliable e-Wallet using a Smart SSD. Life Science Journal, 117-121.
• Polak, P. (2012). Addressing the post-crisis challenges in working capital management. International Journal of Research in
Management (Issue 2, Vol.6), 73-84.
• primerevenue.com. (2017). Retrieved from primerevenue.com: https://primerevenue.com/about-us/
• primerevenue.com. (2017). Retrieved from primerevenue.com: https://primerevenue.com/what-is-dynamic-discounting/
• Shin, H.-H., & Soenen, L. (1998). Efficiency of Working Capital Management and Corporate Profitability. FINANCIAL
PRACTICE AND EDUCATION, 37-45.
• Treasury Today. (2002). Treasury Today. Retrieved December 2017, from Treasury Today:
http://treasurytoday.com/2002/09/working-capital-management-inventory-and-supply-chain-management
• Wandoko, W., Abbas, B. S., Budiastuti, D., & Kosala, R. (2017). Online trust building through third party trust transfer and
third party protection. In Journal of Physics: Conference Series (Vol. 801, No. 1, p. 012060). IOP Publishing.
• WorldPay. (2015). Global Payments Report Preview. Retrieved from http://offers.worldpayglobal.com/rs/850-JOA-
856/images/GlobalPaymentsReportNov2015.pdf
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20. Thank You
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23. Working Capital
• 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
• Current assets are consisted of inventory, accounts receivable (ARs),
marketable securities and cash and bank balances.
• Current liabilities are consisted of accounts payable (AP), notes payable, as
well as other current liabilities (relative portion of the long-term dept for the
subjected year).
• The difference between the current assets and current liabilities is called the
working capital, which is the company’s short-term need for cash.
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24. Cash Conversion Cycle
• It attempts to measure the time span between the expenditure of cash for
the production process and collection of the sales of the goods produced; in
other words, the conversion of money input to the cash again.
• CCC looks at the amount of time required to sell inventory, the amount of
time required to collect receivables, and the length of time the company is
afforded to pay Its bills without being subjected to penalties.
• 𝐶𝐶𝐶 𝑐𝑦𝑐𝑙𝑒 = 𝐷𝑆𝑂 𝑝𝑒𝑟𝑖𝑜𝑑 + 𝐷𝐼𝑂 𝑝𝑒𝑟𝑖𝑜𝑑 − 𝐷𝑃𝑂 𝑝𝑒𝑟𝑖𝑜𝑑
• DSO: Days Sales Outstanding (DSO) / No. of days AR refers to the number
of days needed to collect on sales, or accounts receivable.
• DIO: Days Inventory Outstanding (DIO) / No. of days Inventory refers to the
number of days it takes to sell an entire inventory.
• DPO: Days Payable Outstanding (DPO) /No. of days AP refers to the
company's payment of its own bills, or accounts payable.
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25. BACK UP
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