If a regular customer wants to buy something from a business’s website, the primary part they will need to do is to pay for the product or service. But if we talk about a business paying another business, things become more complicated. Executing a B2B payment is a multi-step procedure that needs accurate data tracking and authorization from different teams during its journey and it also comprises plenty of manual functions.
The B2B payments system is quickly diverting, yet, with appearing strategies that drive the management of complete procedures more effortlessly. In this blog, we will discuss the fundamentals of B2B payments, comprising alternative payment methods and basic challenges that businesses face during the workflow and how contemporary B2B payment systems fix them.
What is a B2B payment solution?
A B2B (business-to-business) payment is the deal of products or services from one business to another business or to a dependent worker (such as freelancers, consultants, and independent contractors). These transactions are frequently recurring payments under constitutional terms or can occur on a one-time basis.
B2B payment instances differ extensively and can comprise:
- A carpooling application paying every single one of its primary drivers
- An enterprise paying its email software provider
- A car repair store pays its merchants for exceptional parts
- An eCommerce store spending its global associates on the checklist
There is no single method by which these payments are conducted. And they vary from standard paper cheques to online merchant accounts.
Methods of B2B transactions
B2B payment methods can have positive or negative effects on the payment landscape relying on which you prefer. Transaction costs can increase over time, and payment uncertainties can have serious consequences for your funds. Also, there is the protection of your payment to regard. Downward, you will get quick descriptions of different B2B payment methods along with some advantages and disadvantages of each.
Credit cards are the primary method in business-to-customer payments (such as paying at a restaurant for the food or paying at an online store for your ordered product). There are a lot of credit card providers in the industry (such as Visa, Discover, MasterCard, etc.). And processing fees differ relying on the payment method and prices for every single card. Payment volumes between online businesses are increased than those conducted by customers. And which directly implies processing fees can add up rapidly. For this cause, credit cards are not been prominent for B2B payments.
ACH payments are online payments that process via an Automated Clearing House system, which is handled by a non-profit called the National Automated Clearing House Association (Nacha). You can frequently call them ACH direct deposit transactions, checks, or direct pay. Most businesses like to take ACH payments because of their level of top security and the rapidness with which they are executing, reaching is basically about one to three business days. In order of fees, they charge less than $1, which delivers essential savings resembling credit cards.
Wire transfers are basically preferred when shifting an essential amount of funds to someone you know properly. With wire transfers, funds go directly from the customer’s bank to the seller’s bank before terminating in their business account. Wire transfers are basically regarded as being secure. But it can be expensive as well. Prices can go to $50 per transaction, relying on your bank’s policy.
Paper checks are well-known, adjustable, and secure for most business merchants, forming them a famous method for B2B payments. But they are not ideal. Buying checks can get costly and manually processing them can be a load on an account management team relying on the volume.
Furthermore, checks can also take various days to arrive at the receiver, and there is a threat they can get failed in the mail. There is also a difficult place for the receiver if they don’t use mobile banking to deposit their check. Moreover, they will also need to visit a bank physically to conduct the payment.
The primary complications in B2B payments
B2B payments have multiple difficulties, but you can crush them with a cautious strategy and payment automation systems. So, let us discuss some of the primary complications and their effect on businesses and account management systems.
Everyone has their selected B2B payment method
If you may have a specific payment method that you select to use, it doesn’t imply that all the businesses you operate with will like to use the similar one. For instance, you may approve ACH transactions, but your trade associate is unshakable about online payment platforms. To simplify this, your account management team will need to be adjustable to your customer’s requirements to the best of your functionalities.
Rising payments get sloppy
An account management team can handle around a hundred payments monthly. But when those transactions divert to the thousands (or also up to 500, really), mistakes and delays happen. More tasks during B2B payment processing are accomplished manually (such as data entry and analysis). So, it is not shocking that complications only boost a team when payments become rising. Then there is no more data and paperwork to follow.
Global B2B transactions are slow and costly
Global B2B transactions also referred to as global transactions or sometimes payment settlement can be a load on online businesses because of the extra expenses and strategies:
- Can the merchant be paid in their local currency?
- Are transactions recordable as they drive across borders?
- Is there an understanding of country-detailed compliance rules and restrictions?
The volume of main issues a B2B transaction experiences only boosts as it diverts globally. Handling this manually can be depleting for account management teams.
Expanded risk of fraudulent activities and scams
B2B transactions have been rapidly undergoing payment frauds and scams. And it is a trend that is not moving away. As per the survey by the Association of Financial Professionals, almost 75% of businesses state they were preys of a tried invasion or exact payments fraud in 2020. The track report also indicates that compromised emails are the main source of attacks.
Some main reasons for so many fraudulent activities or scams: Due to the pandemic, most physical stores shifted online and teams diverted to online work, introducing payment processing to exposures.
Deficiency of visibility
It is vital to make every B2B payment as clear as feasible. But it’s all too common to take inadequate records without a precise split of prices. And bad interaction between businesses also happens often.
Prefer WebPays to facilitate your B2B transactions
WebPays streamlines any B2B payment by taking and processing online payments, automating invoice transactions, and transmitting real-time notifications at every step of the way. With implemented automation tools and straight associations with your recent account management software, WebPays can also assist your team in spending less time invoicing and securely grabbing transactions no matter how many you transfer.
WebPays delivers API access to make more automated payments
WebPays’s refined API assists you in making a strong payment infrastructure for your business. Whether you are transferring 600 payments monthly or 600,000. WebPays can easily manage it all.
When you are a segment of a small business or a huge one, a B2B payment system can assist facilitate a complicated workflow, secure your business from fraudulent activities and preserve time. For further details about the B2B payment solutions by WebPays. You can contact us now or drop us a mail with your query and also take an experience of how we can facilitate B2B transactions for your business.