Can your ERP system handle the complexities of cross-border B2B payments?

Greg Leven
Greg Leven
SVP, Sales, B2B

I speak with a lot of B2B companies in the US about their international business. Some are just getting started or planning to launch in new countries. Others are already doing business in multiple countries. There is often a distinct difference in those conversations.

The companies just getting started are almost all planning to handle their international AR through their ERP system. But, the more experienced a business is internationally, the more gaps they have discovered in terms of what their ERP system can effectively handle. Most cite challenges with invoicing in different languages and currencies, managing FX and short payments, long DSO cycles, and reconciling international payments once they are received.

In no way do they downplay the role of their ERP system. In their view, it is designed to be the system of record and to handle all the financial complexities of their business. And it does in the view of most we speak with. Sometimes though, it simply isn’t designed to handle all the complexities of international AR.

Flywire just completed some research which reinforced my own experience. For the report, we surveyed 250+ financial professionals about how well their ERP systems support their business getting paid by international customers.

Those with more experience on the global stage reported more challenges managing their global receivables through their ERP system than those planning to, or just getting started. The gaps range from payment reconciliation and invoicing in local currencies (where more experienced global companies are almost twice as likely to report problems), to FX, higher DSO, local language invoicing, local payment support, and managing refunds and chargebacks. Finance professionals seem to think their ERP software is well-suited to handle their international A/R. The gaps don’t materialize until they expand and their volume of payments grows.

What’s behind those challenges? Here are two factors:

  • The payments process isn’t integrated. Almost 9 out of 10 (89%) of the respondents said they thought their businesses could save money if more of the cross-border receivables process was integrated with their ERP system. Some international payment processors are better equipped than others for that.
  • It’s hard to get support from senior leadership for payments enhancements. In our survey, almost 7 out of 10 (67%) respondents felt that senior leaders did not understand the need for payment software enhancements in their ERP systems. This would affect how companies prepare operationally to expand internationally.

As you plan your global strategy, my message is simply to not make too many assumptions about what your ERP system can and cannot do when it comes to cross-border receivables. This recent blog offers a good checklist on what you need to ensure a smooth process.
Interested in seeing more detail on the research we did on ERP systems and international payments/receivables? View the free report here.