The oldest tension in B2B payments is becoming one of its newest business models. A dollar cannot simultaneously stay longer on the buyer’s balance sheet and arrive earlier on the supplier’s balance sheet unless somebody finances the interval.

And while the modernization of B2B payments is well underway, with checks steadily losing ground to ACH, virtual cards and other electronic methods, the central working-capital conflict remains largely unchanged. Both sides cannot improve their cash position on the same dollar at the same time.

A company buying goods on 60-day terms is effectively receiving financing from its supplier during those 60 days. Digitizing the transaction may reduce processing costs and reconciliation work, but it does not alter that economic relationship, no matter how heavily banks and software providers spend to connect payment systems directly with corporate accounting and enterprise resource planning software.

That tension has traditionally been managed through negotiated payment terms. But payments generate only transaction economics. The interval around them generates financing economics, and that’s something finance leaders and their partners are recognizing as a new working capital opportunity.

The B2B payments industry spent years reducing the friction involved in moving corporate money. That work continues, but the larger financial opportunity sits on either side of the transaction.

A payment itself is brief. The working-capital cycle surrounding it can last 30, 60 or 90 days.

For buyers, those days represent liquidity. For suppliers, they represent receivables. For banks and other capital providers, they represent an asset that can be financed.

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