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Are intercompany payments the next frontier for B2B payments?

As companies become bigger, they establish legal entities in other jurisdictions, which can include distribution centers, sales offices, buying offices and so forth. Intercompany "due to" and "due from" balances are created through the natural course of business between these entities as they buy and sell to each other. Intercompany invoices must be settled in a timely fashion in accordance with intercompany payment terms and/or service agreements.

While intercompany payment data is not tracked, the U.S. Census Bureau and U.S. Department of Commerce collect information that reveals related-party trade accounts — in 2016, the nation’s international related-party trade accounted for 42.4% ($1,537.4 billion) of total goods.

Some source-to-pay suites have made tremendous strides in adding payment functionality to their toolkit (including digital payments, virtual card payments, cross-border payments, etc.), such as Coupa Pay and Tipalti. Additionally, many B2B payment solutions can manage sending money to subsidiaries to fund their local operations in local currency.