How Modern B2B Payment Solutions Can Benefit Your Business
Today's B2B payment solutions are rapidly changing how businesses handle transactions. Digital innovations improve efficiency and cash flow through secure, electronic processes. And it couldn't come at a better time.
According to a study by Juniper Research, embedded finance revenue — the income nonfinancial companies generate by integrating digital financial solutions — is projected to grow by $136 billion between 2024 and 2028. With this in mind, it should come as no surprise that digital payments are becoming the cornerstone of financial interactions between companies, driving the growth of efficient, innovative B2B payment solutions.
This guide explores B2B payments, looks at how they've evolved over the years, and highlights some of the most popular payment solutions.
What Are B2B Payments?
B2B payments are transactions between two businesses in which one is paying the other for services or goods. These payments are generally larger than business-to-consumer (B2C) payments and have more complex payment processes.
Additionally, B2B options often have unique payment terms. They can be single transactions or recurring payments, depending on the terms set between the two businesses. Other terms might include:
Volume-based discounts
Negotiated credit lines and borrowing
Early payment incentives
Net payment terms (e.g., net 30, net 60, net 90)
How Have B2B Payment Solutions Evolved?
Traditionally, B2B payments involved mailed invoices and paper checks, which made for a time-consuming financial process. These manual methods can be difficult to track and lead to significantly slower payment cycles for B2B transactions.
But over the years, much of the world has been making a shift to digital, including B2B payment options. The transformation began with credit cards and e-checks and has evolved to B2B buy now, pay later.
This digital evolution represents technological convenience and a reimagining of how businesses handle financial interactions. It’s making B2B payment solutions more efficient, responsive, and transparent.
What Benefits Do Modern B2B Payment Solutions Offer?
Modern B2B payment solutions rely on sophisticated financial technologies designed to address complex needs. This evolution can provide these benefits to your business:
Convenience: Today's B2B payment solutions can integrate with accounting software and enterprise resources planning (ERP) systems, providing automated synchronization of financial data.
Security: Advanced features like multi-factor authentication, real-time fraud detection, and encryption help ensure compliance with domestic and global financial regulations while increasing the security of business-to-business transactions.
Efficiency: Modern B2B payment solutions offer payment gateway integration, customer relationship management (CRM) compatibility, and next-gen point of sale (POS) systems like Stripe and Paypal. They also reduce manual processes and minimize the risk of human error.
Faster payments: Digital payment methods accelerate payment cycles and streamline working capital transactions (e.g., accounts receivable and accounts payable).
Competitive advantage: When you provide your customers with modern and flexible payment options, it may give you an edge over your competitors if they don’t offer the same level of convenience.
How to Choose the Right B2B Payment Platforms
The best B2B payment platform for your business will depend on what you need and your plans for future growth. Consider industry demands, expected transaction volume, security requirements, growth planning, and how each platform you're considering will work for your organization.
Consider consulting an ISO partner who can provide expert guidance tailored to your specific business needs. An experienced ISO (independent sales organization) can help you navigate digital B2B payment solutions with personalized recommendations and support. By partnering with Backd, ISOs can offer lending and B2B payment solutions to their customers.
What Are Some Popular B2B Payment Methods?
Businesses can access a wide range of B2B payment solutions and processing methods. Your organization's business model and industry will help you determine which payment services will work for your operations. Here's an overview of the most popular options.
ACH Payments
Automated Clearing House (ACH) payments are popular for medium and small businesses. Similar to debit card payments, they provide a cost-effective and reliable method of making electronic payments from your business bank account to another, usually with minimal processing fees.
A traditional ACH payment is an electronic bank transfer that relies on the ACH network and can take up to two bank days to process (although many now process same day). This option is usually free or low-cost and works well for recurring payments. E-checks also use the ACH network.
Alternatively, businesses can opt for same-day ACH transfers, which are similar but may come with higher processing costs, and the funds are often available within minutes. This option is ideal for time-sensitive transactions and urgent payments.
Wire Transfers
Wire transfers are a type of instant electronic funds transfer between bank accounts. They're ideal for time-sensitive and large transactions. This option is processed in real-time, often with immediate funds availability.
When a business initiates a wire transfer, the funds become available to the recipient within hours or sometimes minutes. However, this convenience typically comes with higher transaction fees than ACH payments.
Cross-Border Payments
Today's cross-border payment options allow international businesses to make faster, more secure payments between bank accounts overseas.
Juniper Research indicates that global B2B transactions will reach $124 trillion by 2028 because instant payments are revolutionizing the market. Instant transfers currently account for just 17% of cross-border payments; by 2028, that number is expected to reach 42%.
International payment providers and solutions vary, but common options include Single Euro Payments Area (SEPA) payments and Society for Worldwide Interbank Financial Telecommunication (SWIFT) payments.
Virtual Cards and Credit Cards
Virtual credit cards offer security and control for B2B transactions, providing a crucial evolution in commercial credit card payments. They function with a randomly generated 16-digit credit card number and CVC code that's digitally created for one-off purchases and high-volume, recurring payments. This number is linked to an actual credit card.
Virtual cards help reduce the risk of fraud-related chargebacks with advanced security measures to prevent unauthorized access by masking actual credit card details. You can also set up specific spending limits and expiration dates for virtual cards, so charges must be made within a predetermined timeframe and amount. Most providers offer a digital wallet dashboard that makes it easy to keep track of all your virtual cards at a glance.
According to Mastercard, some virtual cards also convert currency in real-time, which can benefit companies that need to make international transactions.
Digital Invoicing
Modern invoicing solutions help streamline payment processing and improve cash flow management by offering flexibility and efficiency for businesses that manage multiple clients and payment types. By using digital invoicing, organizations can reduce errors, process payments faster, and maintain cash flow visibility.
Many digital invoicing platforms streamline invoice processing, ensuring flexible payment terms like installment payments and the option to provide things like early payment discounts. Digital invoicing can also offer late payment protection strategies like automated reminders, penalties for delayed payments, and factoring services.
B2B Buy Now, Pay Later
Business-to-business buy now, pay later (B2B BNPL) is an emerging payment solution designed to give a flexible payment option to businesses that face cash flow challenges or seasonal income. Unlike traditional payment models, this approach allows your customers to purchase goods or services upfront and spread their payments over a series of installments.
When you offer a B2B BNPL payment option (like BackdPay), you get paid instantly while your customers get the flexibility. This can lead to reduced payment delays, better cash flow management, and higher average order values (up to 150%). Plus, BackdPay integrates seamlessly with existing checkout and invoicing systems through payment buttons and links.
Your customers will receive access to:
Net 30 terms at 0%
Pay-over-time options, up to 12 months
Instant approvals up to $50,000
Expand Your B2B Payment Options With Backd Today
Ready to transform your business with digital B2B payment solutions? The right options can provide near-immediate benefits to your business, improving relationships with clients, enhancing efficiency, and bolstering your payment security.
Remember, you're not limited to a single option. Many organizations rely on several B2B payment solutions to meet the needs of their customers, and you can too. BackdPay offers a powerful B2B BNPL solution that provides immediate financial flexibility for you and your customers.
Don’t let old-school B2B payment solutions hold your business back. Apply to become a BackdPay partner today and embrace financial innovation.
