B2B Payments: Top 5 Payment Solutions for Business

Business-to-business (B2B) payments represent an even greater opportunity. But payment solutions are still lagging. The Association for Financial Professionals found that 51% of B2B payments are still done by paper checks. Paper checks aren’t the most convenient or secure way to pay. A majority of companies plan to move to digital payment methods for these reasons.

Payments can be made, received, and processed more easily with digital B2B products. You can also improve your cash flow, something every small business owner wants. Learn more about B2B Payments and the best B2B products for small businesses.

Overview of B2B payments

B2B payments are payments between two businesses for the exchange of goods or services. Paper checks remain the most popular way that businesses pay each other. Digital B2B payment solutions allow businesses to receive, process, and issue payments faster, which improves ‘s Cash Flow.

B2B payments are behind consumer payments in terms of innovation. This is because B2B (payments between businesses) are impacted by factors that do not affect consumer payments.

Included are:

• Volume: Payments made between merchants are usually higher than those between consumers. The B2B payment industry has a total value of $18.5 trillion. This dwarfs the P2P payment industry, which is only $709 billion.
• Frequency: Many merchants have contracts which allow them to conduct regular transactions. A retailer, for example, might receive a monthly shipment from their supplier.
• Industry: Some industries have specific payment requirements. Healthcare providers, for example, often use B2B custom payment products due to HIPAA regulations and privacy laws.
• The people involved: Each B2B transaction involves multiple parties, including the accounts payable, invoice, billing and procurement teams.
• Payment delays: When paying a family member or friend for something you do, it is often done on the spot (e.g. If you split a restaurant bill, it’s usually done at the time of the event. B2B payments cycles can last up to 90 days.

More and more companies are choosing digital payment methods to track B2B payments. 51 percent of organizations pay with checks, down from 81% in 2004, and 44% of companies still receive payments by check.

B2B payment processing: 5 ways to send and receive money

Five main methods exist for sending and receiving B2B payments.

• Checks: This category includes paper checks as well as electronic checks that are issued by the buyer to the seller. The seller’s account will be credited by the buyer’s account when the check is deposited.
• Wire Transfers: These are money transfers between banks, which are sent through a financial system like SWIFT. Money is usually delivered within hours with wire transfers.
• Electronic banking transfers: These are payments made between banks via the Automated Clearing House. It is one of the most reliable and safe payment systems. However, bank transfers can take up to a week longer than wire transfers.
• Credit Cards (including virtual cards for one-time use): The buyer can delay the payment by one or more billing cycles.
• Payment gateway: A Payment Gateway is a payment platform that allows the buyer to make online payments for goods and services during the checkout process.

The cost and security of each option are different. Most businesses are moving away from paper check payments and towards electronic and digital payments. We’ll show you some B2B payment products that cover a range of payment processing options.

Benefits of Using B2B Payments

There are many reasons why your business may be reluctant to abandon check payments. Payment apps and billing and invoicing software make B2B payments faster and easier. They can also improve your cash flow.

Improve Cash Flow

Starting a small company is a risky endeavor, as failure rates are around 50% within the first five years of business. Cash flow issues are the leading cause of business failure. You can better track your cash flow by automating your B2B transactions instead of using paper checks.

Reports in payment software and apps give you a quick overview of your receivables and payables. If you have a few merchants who pay you late regularly, you could either enforce stricter payment deadlines or stop working together. B2B solutions make it easy for your customers and you to receive payments. Invoicing apps, for example, allow your customers to pay you in one click instead of writing a check to mail to you. It will help you to improve your cash flow by getting the money into your account faster.

Simple Bookkeeping and Taxes

B2B solutions can also be used to streamline your accounts payable and receivable. It can be difficult to manage a large number of checks that are coming from different parties or going in various directions. You can easily lose checks or make mistakes when you enter the check amount into your accounting software.

B2B Payment Solutions automatically record and store payments. Some integrate with accounting software or bookkeeping programs to make tax filing and bookkeeping easier.

Save Time and Resources

You, your team, and your clients will save time by adopting a B2B payment solution. Your customer does not need to mail you a check. You don’t have to reconcile and deposit the check.

While this may not seem like much, over time, the cost can amount to hundreds or even thousands of dollars. You could spend more time with your team on the core products and services.

Increase Security

Mail theft is increasing in cities all over the country. Another reason to switch to B2B solutions is to avoid mail theft. Digital solutions are not immune from hackers or security breaches. However, the majority of payment providers employ a team consisting of data experts and engineers to protect your information (and that of your customers). Pay digitally also leaves a more transparent payment trail.

The Best B2B Payments Solutions

The B2B payment space is a crowded one. B2B payments are offered by several banks, fintech companies, and industry experts. New companies enter the market frequently.

Here are the top B2B payments solutions we found:

1. Fundbox Pay

Best for Businesses that buy or sell net terms.

Fundbox is an invoice finance and business line of credit specialist for small businesses.

Fundbox Pay is the newest product from Fundbox. It provides a B2B marketplace.

Fundbox Pay gives sellers the option to receive payment immediately on an invoice while giving buyers up to 60 calendar days to pay. Fundbox Pay allows sellers to invite their customers and, if they are approved, send them payment requests. Fundbox will send the payment immediately to the seller once the buyer accepts. The 2.9% fee is similar to that charged by PayPal and Square for credit card payments. Fundbox can be paid in full within 60 days, without interest. The buyer has 60 days to pay Fundbox, interest-free.

Fundbox Pay also offers a checkout feature. Fundbox Pay is a great option for B2B or wholesale websites. Credit decisions are made in minutes. If the buyer is approved, they will be able to complete the checkout, and both the seller and buyer will get paid immediately. All of this happens when credit is needed, just like online shopping experiences that allow you to pay by credit card. It’s not necessary to waste time with emails and faxes in order to set up payment terms.

Fundbox Pay B2B solutions shift the risk that the buyer will not pay the seller. It is very similar to how credit cards are used in the consumer market. The merchant is paid immediately when a person uses a credit card to pay for a movie or a meal at a restaurant. However, the consumer will defer payment until the next billing cycle. Fundbox Pay extends the concept to B2B transactions.

Originally Published on The Tech Trend