If you didn’t know already, to keep yourself competitive as a business and keep it running, you’re going to need B2B payment solutions. We’re going to tell you 5 reasons why you should invest in them today!
What is B2B payment?
Simply put, B2B (business-to-business) payments are the transactions you make between you and other merchants/suppliers. There are certain requirements for B2B payments that are in place.
These mitigate potential issues that could come as a result of the scale, method, and contract of B2B payments. Understanding these rules help you understand why certain platforms provide the features that they do.
Why you need B2B payment solutions
So, now we have for you 5 reasons as to why B2B payment solutions are important for your business today:
Managing the flow of money between businesses can be a complex task
One of the top reasons a company doesn’t make it is because they have cash flow issues. Automating the B2B processes allows you to easily identify patterns in the cash flow. This helps you make smarter decisions about where and when you spend or save.
Using a payment software platform for example also enables you to generate reports that give an overview of your transactions. Such transparency means you can identify merchants that pay regularly and those that pay late, and then you can handle those relationships accordingly.
B2B accounting software also makes it easier for customers to pay you. Invoicing apps allow merchants to pay with a simple click rather than writing a check and mailing it. This gets the money in your account sooner and greatly improves cash flow.
Having a robust B2B payment solution is also a good way to simplify accounts. Rather than managing a bunch of checks coming and going, the software automatically scans, records, and stores them. Requiring no human labor and therefore reducing room for error.
A B2B payment system may even integrate with your accounting or bookkeeping software for shared data management. This also makes filing taxes a lot easier.
B2B payments can take several different forms
You and other merchants can also accept B2B payments in different forms and ways:
Credit card payments are a standard way to collect payments online for lots of businesses. While reliable, most credit card payments come with percentage fees. When you’re processing a significant volume of payments, these fees can compound quickly to become too expensive. Some credit cards also have a transaction limit, making it impossible to process larger payments.
Bank and wire transfers are secure payments between financial institutions. These types of payments can be a hassle to set up, but when completed, are very reliable. While there are fees involved in these kinds of transfers, there is no limit to the amount that can be sent between banks.
Cheques may feel antiquated, but there are businesses that still accept them as payment. While this is a reliable and easy-to-track payment method, checks still take a lot of time to process. There is also more room for error with handwritten paper checks because of poor handwriting or the lack of an electronic paper trail.
Any physical form of payment like this brings up logistical issues as well. You’ll either have to deliver the check in person or mail it to the other business.
Cash payments are traditional but the least reliable and most cumbersome method. Anything over the few hundreds will be difficult to keep track of in transit. That, combined with the fact that large cash payments have significant regulations regarding their use, makes this a very inefficient way to make B2B payments.
Payment gateways are the most popular way to process B2B payments. They facilitate financial transactions for your business and make it easy to collect payments. While you’ll still be relying on a third-party payment service to process payments, the software available to do it is built to streamline the billing process as much as possible once you’ve successfully integrated it into your business.
Paper checks can be costly and require significant time in processing
Adopting B2B payment solutions saves you precious resources like time and money. You don’t need to write a check or deposit and reconcile one.
Processing a hard copy check costs money which can add up if there’s a large volume. You and your team could be spending time more efficiently on core products and services while AI does the menial tasks. Also, faster forms of payment like credit cards and digital payment platforms have overtaken the use of paper checks.
Wire transfers are secure, reliable and offer a guaranteed delivery date
Sticking a check in the mail opens a business up to fraud. Mail theft of checks is still a very real threat. Although digital solutions aren’t entirely immune to security breaches, most payment providers have a team of engineers and experts watching over your data at all times. There is also a clearer “paper trail” when every transaction are done electronically.
A variety of electronic payment options exist to meet the needs of different transactions
More businesses have adopted automation because of the pandemic to reduce invoicing and payment delays. Manual processes and any collaboration involving paperwork were difficult with strict lockdown rules in place. Businesses could no longer send invoices and pay bills promptly.
Investors are also increasingly betting on automated B2B payment companies. When businesses fully switch to automated processes, payment solutions will be there for them. Automating B2B transactions gives so much more confidence to your investors and stakeholders.
Using mobile devices has also been a convenience that is starting to catch on for B2B transactions. Maybe you’re a business that can benefit from mobile payments, like for transportation or food supplies. You and other merchants would benefit from the autonomy that a mobile platform can provide and accept the order and payment immediately.