So, you’re starting a new business and want to know the details of how B2B payments work? Well, that’s great because you’ve come to the right place.
You may have some of these questions in your mind:
- What are B2B Payments?
- What are the Most Common Types of B2B Payments?
- What are the Challenges Associated with B2B Payments?
Not just that but you’re most probably thinking about exploring other aspects of B2B payments. Don’t worry, we’ve got you covered. We’ll highlight all the important aspects of B2B payments step-by-step So, without any further ado, let’s jump right into it.
What are B2B Payments?
B2B Payment (Business-to-Business Payment) is a transaction between two businesses. A B2B payment is a bit complicated compared to a B2C payment.
A B2C payment is all about receiving cash or electronic payment from the consumer for the service provided. And it’s usually done within a few seconds.
On the contrary, a B2B payment requires extra because there’s additional paperwork involved. Payment Terms, the average price of goods and services, the complexity of the process, and the quantity and frequency of the order are some important aspects that discriminate between B2B and B2C payments.
When dealing with a business, there is plenty of paperwork involved. And you need to get everything done right so you may avoid all types of consequences. Thanks to the technological advancements that have made things a lot easier than before. Learn about Mobile Payment Solutions.
How a B2B Payment is Executed?
The buyer places an order for a set of products or services through an appropriate channel. The supplier’s Accounts Receivable team approves the order and then they generate an invoice including the costs of products or services ordered. The team usually sends invoices within 30 days.
The buyer then makes the payment through an official channel because they need to keep a track of these payments for legal purposes. The buyer sometimes needs to pay a late fee in case of delayed payment. However, this is how a B2B payment is executed.
The process seems to be quite lengthy. Digital payment options like the ones we provide at Beyond Bancard have made this process quite simple and smoother.
What are the Most Common Types of B2B Payments?
The B2B Payment Industry has drastically improved over the past few years. The Millennials are now taking over the industry and they’re now exploring new ways to simplify the payment process. However, some old-school methods like paper checks are still intact. But the stats show they won’t last long. Let’s talk about the most common types of B2B payment options you can use for your business.
1. Wire Transfer
Wire Transfer is one of the fastest B2B payment solutions available these days. But it’s a bit expensive because the sender needs to pay $40 for each transaction and the recipient also pays $15 for receiving money.
The process is quite simple. You need to visit your local Western Union branch and pay them the funds you need to send to the intended recipient. This entire process takes only a few minutes and the recipient can get the payment from their local Western Union Branch on the same day.
In fact, you can now complete the entire process at the comfort of your home using Western Union’s mobile app. For the first time, you’d have to spend some time adding the recipient’s information to the app. Later on, you can make the payment with just a few taps.
Without any doubt, it’s one of the best payment options for businesses providing merchant services worldwide.
2. Credit Card
A credit card is also a viable solution businesses use to process payments. Many businesses are now using Pos Software and other online platforms to process payments through credit cards.
Although it’s a secure mode of payment, we can’t ignore the high transaction fee associated with credit cards. Whether you’re a buyer or seller, you’re required to pay a particular amount of money to complete the transaction.
Furthermore, credit cards have a spending limit that may cause trouble if you’re willing to place an extra order.
ACH (Automated Clearing House) payments are a remarkable option for recurring B2B payments. It’s an affordable digital payment solution you can use for your business. Keeping a track of these payments is quite easier as they appear on your Month-end statement.
However, this payment option is only available within America. And the buyers are supposed to complete the transaction within the allowed time otherwise, the supplier has to wait for the next working day to receive the payment.
4. Paper Checks
Although paper checks are now becoming outdated, we can’t completely ignore them. Paper checks are literally the safest mode of transaction. Therefore, many businesses still use them to stay safe from fraudulent activities. However, it’s a lengthy payment process due to which many eCommerce store owners avoid using it.
There are some other types of B2B payments you can use for your business. We’ve written a detailed article on this topic. So, don’t forget to check it out.
What are the Challenges Associated with B2B Payments?
Although B2B payment processes have become a lot easier than before, there are still some challenges associated with these payment options.
Risk of Fraud
Without any doubt, the authorities are trying their best to eliminate B2B payment fraud. Still, a number of businesses become a victim of several fraudulent activities every year because it’s not easy to keep a track of incoming and outgoing funds.
Too Many Payment Options
Many of you may consider it a benefit as you can choose the payment medium that best suits you. But if your supplier doesn’t accept the payment option you’re willing to use? And have you imagined the problems you may have to face settling the bills?
So, it can be quite challenging dealing with multiple payment options.
Fluctuations in Processing Time
The B2B payments may take around 30-45 days for a complete cycle. You need to deal with a number of businesses that use different options to send or receive payments. So, you can’t be sure about when you’re exactly getting paid for a particular project. Thus, you may face some problems with managing funds for different projects.
The B2B payments are getting better day by day. B2B payments are more complicated compared to B2C payments. We’ve described every important aspect of B2B payments in this article. And we’ve tried to answer the basic questions that come to someone’s mind when they’re exploring details about B2B payments.
If you still have any confusion about “What Are B2B Payments” or need more information on this topic, feel free to contact us. We’ll be more than happy to help you.
Need to process B2B Payments?
Beyond Bancard is the best option.