A new generation of businesses is reshaping the B2B payment process!
Currently, automation is the driving factor in the way we get compensated. Electronic transfers have mostly supplanted paper checks when it comes to consumer payments.
Technology has made it easier for people from all over the world to interact and collaborate. Although there are many choices, the market has gotten overcrowded. Do you know where to begin your search for a B2B platform that will meet your company’s needs?
What are B2B Payments?
B2B payments refer to the exchange of goods and services for an agreed-upon value denominated in a currency, such as the US dollar. If the buyer and seller agree, B2B payments might be regular or one-time only.
There is much room for both paper checks and digital business to-business payment methods in the payments market. B2B payments can be processed more quickly with this B2B approach, which improves cash flow significantly.
What Methods of Payment are Prevalent?
The supplier typically issues an invoice instead of receiving money during B2B purchasing encounters. The value of the goods or services delivered to the customer is documented on an invoice. In this situation, the invoice would specify the payment terms, including the date on which payments are due.
Customers’ payments can be collected in various methods by suppliers and merchants. Traditional, digital, and intelligent costs fall into the same broad category.
Payments are Made in an Old-fashioned Way
For B2B transactions, check payments will account for 42% of all transactions in 2019. Customers can instruct a bank to make a specific payment to a supplier by signing and dating an official document.
As with a check, you can also pay with a money order by mailing it in. A money order varies from a check-in that is guaranteed to be paid, unlike a check. A recipient receives a money order after the money order has been purchased in advance using another form of payment (cash or an equivalent) and then delivered. In most cases, money orders are only available for quantities under $1,000.
Cash is a legal tender in exchange for products, debt, or services. Banknotes and coins are the most common tangible representations of money. Cash has been used to transact business for as long as commodities and services have been exchanged. In addition to real cash, cash can also be a term for readily available payment forms and can be swiftly converted into cash.
The modern-day barter system can be compared to payment-in-kind. It’s the practice of purchasing instead of cash by exchanging commodities or services. Taxes are still due even if you use bartering to save money. It is still necessary for those who receive payment-in-kind to record it on their tax return.
Payments can be Made Via the Internet
An example of a debit transaction is when a debit card is used to deduct money from your account. When your debit card is used to make an online transaction, your bank is notified electronically and places a hold on your account for the transaction amount. After the merchant or supplier delivers the bank transaction data, the bank then transfers the money in your account to the supplier.
In other words, credit is a contract between a borrower and a lender. The borrower (typically the client) will get money from a lender to pay for products or services. To repay the loan, the borrower must do so with interest. Debit card payments are immediately withdrawn from your account, whereas credit card payments appear on your credit line, suggesting that the amounts will be paid later.
Charge Customers’ Credit and Debit Cards
Debit and credit are structurally and functionally quite similar, but some key differences should be noted. There is no interest charged on a charge card, for starters, so the user must pay off the entire balance when they receive their bill. For the most part, credit cards are only granted to people with high credit scores. If you fail to pay your credit cards on time, it can substantially influence your credit rating.
Cards in the Cloud
As the name implies, virtual credit cards are a virtual form of a credit card, as opposed to a physical one. Plastic, chips, and PINs are not included. Improved security, better control, and precise transaction data are what buyers appreciate most about them. This payment method isn’t popular because suppliers must manually enter the card information into their point-of-sale (POS) system or virtual terminal. As a result, solutions exist that allow virtual cards to be processed in a straight-through manner and interface with suppliers’ Enterprise Resource Planning (ERP) systems so that remittance data may be entered automatically.
Transfer of Money via the Internet (EFT)
An electronic funds transfer (EFT) is a method of electronically moving money between bank accounts. The transfer can be done between one financial institution or between many financial institutions. Electronic funds transfers (EFTs) are sent using computer-based systems. Thus bank employees are not directly involved in the transaction.
Clearing House Automated (ACH)
National Automated Clearing House Association (NACHA) operates the ACH EFT system in the United States. It is an electronic transfer of funds from one bank to another.
Wallet in the Cloud
E-wallets, commonly referred to as digital wallets, are software systems that securely store credit card and other payment information. Store funds, make transactions and track payment history with digital wallets. Thanks to the widespread adoption of digital wallets on mobile platforms, customers can now pay with their smartphones. As all payment information is safely and compactly kept in digital wallets, physical wallets are effectively eliminated.
Paying with a smartphone
Aside from just moving money from one person to another, intelligent payments include essential business information with the payment itself. In particular, AR teams will find this helpful because it provides them with the information they need to quickly and accurately match incoming payments to their invoices.
While any previously stated digital payment methods can be used to make intelligent payments, the main distinction is the setting in which the payment is made. B2B transactions can be greatly simplified when payments are made via an online portal powered by a SaaS solution or via an integrated payments system connected to your ERP.
See our B2B payment resources: