More than $18.5 trillion worth of B2B payments was recorded in the U.S. alone in 2016, and that number is expected to soar to more than $23 trillion by 2020. While the value of B2B payments keeps increasing, many companies have been slow to update their online technology compared to that of their B2C counterparts.
The payments that we make as consumers in store and online has changed drastically in recent years. Credit cards can be “tapped” and alternative payment methods like wearables and mobile devices are becoming more popular at the point of purchase. The effect has resulted in payments having much less friction.
But when it comes to B2B payments, over 50% of U.S. companies still rely primarily on paper checks. Even though some of this has to do with B2B payments generally being more complex with settlements not being immediate and payment requiring approvals and adherence to internal accounting processes, there is still a large opportunity for businesses to increase their efficiency, and do so in a way that adds more revenue to the bottom line.
Here are a number of benefits for why B2B companies should adopt online payments.
The time between issuing an invoice and receiving payment can often range from 30 to 120 days. This can affect cash flow and prevent businesses from being able to pay their own bills on time.
Digital B2B payments are immediate. A sales partner can create a customized and detailed invoice that can be emailed to the customer. That email then contains a link to a cart page where payment can be made using the customer’s preferred method whether it’s via credit card, ACH or an alternative payment method. The transaction is then processed and settled much quicker.
An inefficient paper-based process can be costly, especially if staff need to follow up with late or failed payments. Costs per check can range between $4 and $20 not including the time you have to wait to be paid and the time staff have to spend to reconcile paper payments. By taking a paperless approach, you can completely eliminate all material and labor costs associated with paper-based billing and automate the process.
It’s Better for Overseas Payments
If you have clients around the world, you need to have the options that they want and expect. This includes accepting their local currency and having their preferred payment methods available. These can be easily configured in your digital payment platform so that you can provide a better payment experience for your customers around the world.
It Minimizes Errors
An automated digital payment platform makes reconciling payments and tracking revenue much easier. It takes out many of the steps in a paper-based process, reducing the chances of errors. If you work with reseller partners or have a sales-based commission program, the platform will automatically calculate what is owed based on commissions you set. Your partners and sales staff are then automatically paid out as well.
It Saves Staff Time
Staff time is valuable and the less time that has to be devoted to the tasks related to payments, the better. This includes time saved following up with late or failed payments, calculating and remitting international sales taxes, monitoring for failed transactions like and NSF check and ensuring all payment security measures are up-to-date. These functions can all be automated with a digital payment platform for B2B payments. This then allows employees to focus more on your core service.
It Gives you Real-Time Data
It’s important to know how your partners and overall business is performing based on revenue in real-time. This can give you insights on what strategies are working and which ones are falling short so that you can adjust accordingly. Your KPI dashboard can give you data on payments that can be segmented by geo, time period and more.
Moving to the Cloud
There are a lot of potential efficiencies and savings that B2B companies stand to gain by digitizing their payments with other businesses. It provides a better and more professional experience for customers, streamlines payments and frees up time.
With a digital B2B payment solution like PayMotion, you can speed up the billing process for both your customers and partners and reduce costs and friction while doing so. Our flexible API can also fully integrate with your current revenue-tracking technology, ultimately giving you more control and ease to manage your payment ecosystem.