Modern technology has made financial business management much easier than it was ten years ago. While many companies still use cash and checks for transactions, there has been an increase in electronic B2B payments.

There are more B2B payment options available, but there are still factors to consider such as security and processing time. One payment method may work for one company, but not for another.

We can help you find a payment option that will reduce payment risk and increase cash flow for your B2B company. This comprehensive guide will help you navigate the complex B2B payments landscape.

We will begin by discussing the possible payment problems that B2B businesses may face and the benefits of a smart solution. We will provide a list of B2B payment options, as well as reviews, to help you choose the right one for your business. 

A review of B2B payments

B2B payments can simply be described as payments between companies for goods and services. A company may pay a supplier for equipment or a restaurant might pay their suppliers for vegetables, fruits, and meats. In general, a B2B payment is created when one business invoices the other.

There are many opportunities for business to business payments. Deloitte estimates that the US B2B payments market was $16.5 trillion in 2014. It is projected to grow to $231 trillion by 2020. The numbers are even more remarkable on a global level. In 2020, B2B will generate $231 trillion.

These are the industries that receive the most B2B payments

• Manufacturing – $3.53 Trillion (28.8%)
• 2.60 trillion dollars (21.2%) for professional and business services
• Finance, insurance, real-estate, rental, and leasing – $2.19 trillion (17.8%)
• Mining – $685 Billion (5.6%)
• Wholesale trade – $643 Billion (5.2%)

Despite the many opportunities for disruption, B2B payments solutions are still behind consumer payments. Paper checks remain the most popular method for business transactions. Why is this? This is because B2B payments are influenced by many factors that have no impact on consumer payments.

Volume: Merchant payments have higher value than consumer payments

Frequency: Contracts between businesses often include regular and recurring transactions.

Industries: Some industries have their own payment requirements (which can be seen in the industry revenue above).

Because of the complexity of B2B transactions, there are many people involved.

Payment delays: B2B payment cycles can take up to 30 days. This is much longer than the personal transaction which takes place on-site or in a matter of minutes.

Different types of B2B payment media

Cash

Businesses have been using cash to pay one another over the years. However, this seems to be slowly becoming obsolete. It seems strange to pay a supplier with a small bag full of bills. This is a huge task, especially if the contracts are worth billions of dollars.

Checks

It is quite simple to pay by check in the world of B2B. This category includes both traditional paper checks as well as electronic checks that are issued by a buyer to a seller. The seller will receive the payment request from his bank only after the check has been deposited.

It is interesting that while we don’t use checks as much in our personal lives they still dominate business.

Wire transfers

Western Union introduced wire transfers over 150 years ago. Electronic fund transfers between banks will be routed via financial networks like SWIFT and Fedwire. Despite being very expensive, this payment can be processed between businesses in hours.

Credit cards

Because of the processing fee, credit card adoption is not acceptable by all vendors. This is especially true for small businesses and startups. It allows the seller to receive payment quickly but the buyer can delay their payment for up to one billing cycle.

Payment gateways

Payment gateways like Paypal and Stripe allow buyers to pay online for goods and services during checkout.

B2B Payments: The Challenges

B2B companies face many obstacles in choosing and selecting the best payment solution.

Here are some common concerns about the state of B2B payments.

Variety of payment mediums

There are some drawbacks to the availability of different payment methods for B2B. There are many options available to them, including the ability to use digital coins to send payment cheques or compare B2B prices to USD prices . Each business is unique and may choose to accept a different payment method than the vendor. You may not be able to accept wire transfers from customers who want to pay you. The interoperability of different platforms means that business owners are reluctant to use modern payment tools to consolidate payments.

Security concern

Data security is an extremely important concern in online payments, particularly in B2B commerce where transactions are frequent and can lead to fraud. Deloitte’s recent study shows that payment fraud has affected 22% of middle market businesses.

Modern payment systems are being adopted by more B2B companies to avoid losing funds.

Transparency

Any business that wants to manage cash flow must be able to see the status of any transaction at any time. Inefficiencies, errors, and increased headcount will result if digital transactions are not visible between firms.

Time

It can sometimes take a long time to receive all payments due to the complexity of the process and the large number of B2B transactions that occur every day.

It takes on average 40 days for a B2B payment to be processed. This is especially true when many organizations have different payment cycles. One company might cut checks twice a month, while another pays out monthly.

Cost

When looking for a way to pay others, business owners must consider the fee for account maintenance and transaction fees. You must be prepared to pay substantial fees for payment services if you use credit cards or wire transfer.

If you pay by bills and collect check payments, you will have to spend a lot of time managing cash inflows. We have seen that while a large company might be able afford it, most small businesses won’t.

Solutions to B2B Payment Problems: Benefits

B2B businesses are increasingly looking for risk-free, convenient ways to pay out due to inefficiency of existing payment methods. We have seen a rise in the number of B2B payment options on the market. These are the benefits businesses in all industries will reap from the revolution

Increase cash flow

Business failure is most often caused by poor cash flow management. Automating all B2B transactions allows you to easily identify patterns in their outgoing and incoming cash flows via reports. This helps minimize financial management failures.

Business administrators are able to quickly solve financial problems.

They can also enforce strict deadlines, or cease working with merchants who routinely pay late. B2B payment solutions make it easier for customers to pay you, and allow you to receive payment faster.

You can save time and money

A B2B payment solution automates a lot of repetitive tasks such as reconciling checks and depositing checks. This allows you and your employees to spend more time on product development or other important areas.

Security enhancement

Modern payment systems may not be as secure as they used to be, but most payment providers have top-notch security and a team that includes engineers and experts who can detect and prevent any malicious intent. Combining this strong security with digitally tracked payments systems can provide improved security.

These are the best B2B payment platforms.

There are many fintech companies and banks that offer B2B payment services. It seems like more platforms are being added every day.

Let’s take a look at the best options available here.

Fundbox

Ideal for: B2B companies selling or buying on net terms

Fundbox is a small-business lender that specializes in invoice financing and business credit lines. Fundbox allows the seller to receive payment immediately and the buyer to postpone for up to 60 days.

This is how it works: After their buyer has been approved, the seller invites them to Fundbox Pay. Then they send them a request for payment.

Fundbox will send the balance to the seller as soon as the buyer accepts it. There is a 2.9% processing charge. Fundbox will send the balance to the buyer within 60 days. They can extend terms up to one year by paying a flat weekly fee after 60 days.

Fundbox offers B2B eCommerce and Wholesale business checkout functionality, which is comparable to using credit cards for checkout.

Paypal

This network is ideal for B2B companies that use invoices to bill clients or pay vendors.

Paypal offers buyers the ability to pay with credit or debit card using their Paypal balances, or from a linked bank account. The seller’s fee for each transaction is 2.9% plus $0.30. Businesses can send and receive money using the Paypal mobile app.

Paypal offers B2B payment options that are more sophisticated than others. This is Paypal Payment Pro. It costs 30$ plus monthly transaction fees.

This upgraded plan allows for payments via phone, mail and fax. It is easy to create and host an online shopping experience for wholesale buyers.

Square

Ideal for: B2B businesses that focus on online payments for customers

Square is a market leader. Square, like Paypal, supports many B2B payment options, including credit cards that cost 2.75% per transaction, and invoicing which costs 2.9% plus $0.03 each transaction. Square users cannot pay with a linked account to their bank account, unlike Paypal.

Quickbooks

Ideal for: B2B businesses who use Quickbook for accounting Quickbook, a well-known payment provider for small businesses, is perfect for these types of business. Quickbooks is a B2B payment option that works the same as Square or Paypal.

One of its most distinctive features is the ability to automatically sync ingoing and outgoing payment with user’s accounting statements. This makes it easy to do bookkeeping, taxes, and other tasks.

Credit card fees are 2.9% plus 0.25 per transaction. This is slightly less than Square and Paypal. Businesses that accept $20 per month or have total transactions of $7,500 can receive a discount on these rates.

Due

Ideal for: B2B companies who want one platform to manage their time and payments

Due offers full-scale payment solutions including electronic invoicing and mobile payments. Project management is also possible. Due offers a low-cost payment processing service starting at 2.8%. This makes Due an excellent choice for law firms and bookkeepers.

Transpay

Ideal for: Businesses that do business in foreign countries. Transpay supports international payments from and to 200 countries in 60 currency currencies. Transpay is a great option for small businesses as it reduces the cost of wire transfer or bank transfer abroad.

This payment method allows business owners to send money directly from their US bank accounts to their local account in local currency. Transaction fees are much lower than bank wire charges, which can range from $5 to $20 per transaction.

What should you look for in a payment provider

There are several important factors to remember when searching for a B2B vendor.

Utility

You need to select the right payment platform for your particular use case. If you have international business, it is important to choose a platform that allows payment transfer across borders.

Reliability

It is so crucial to pay your bills on time. You need to be able to rely on your chosen payment provider every day.

Integration

Inadequate payment solutions are not meeting business needs to be able to see their finances clearly. This problem can be solved by today’s innovative payment solutions that integrate with common accounting tools.

You should ensure that any payment platform you choose is easy to use and gives you an accurate picture of your finances.

Approval process

Every business owner wants a simple, fast, and easy process to apply for payments. This requirement should be met by your preferred payment platform.

It’s easy to use

Changes in payment platforms are made to make it easier. Let’s look for the most intuitive and quick one.

Best practices for B2B payments

Each business is unique and no one size fits all. It is possible that the payment solutions that work for you may not work for other businesses. These are some of the most effective practices for B2B sellers and buyers.

For sellers

• Right after the transaction, invoice customer

• When the payment deadline approaches, send follow-up reminders

• Early payment discount and penalties for late payments

• Consider credit card allowance

• Buyers

• Do not pay your invoice until they are due

• If you need to reconcile the cost, use the credit card.

• If you miss a payment deadline, notify the vendor

• For more favorable terms on payment, negotiate with your vendor

• Instead of using checks, pay electronically

Final thoughts

Technology has revolutionized every aspect of modern life, including business. Business transactions today are more complicated than ever, so we need to use smart, convenient payment platforms. Selecting the right payment platform for your B2B company can be like choosing the right boat to take you on your journey.

There are many options available, but you need to choose the one that best suits your business. This article is intended to be an informational resource for building B2B sales strategies. We appreciate your time.