In the fast-paced world of business, where transactions occur at breakneck speeds, it’s essential to understand the intricacies of B2B payments. These transactions form the backbone of the global economy, enabling companies to buy and sell goods and services. With the evolving financial environment of 2023, it’s increasingly important to get ahead of the game on the different methods and trends in B2B payments.
B2B payments definition
B2B payments, short for Business-to-Business payments, refer to financial transactions between two or more companies or organizations for the exchange of goods or services. These transactions encompass an extensive range of activities, including purchasing supplies, paying vendors, settling invoices, and conducting other business-related operations.
B2B payments differ from B2C payments because where B2C payments occur instantaneously the moment a customer purchases a product or service from a business, B2B payments require a longer period of time to finalize the transaction.
The importance of B2B payments
B2B payments are the lifeblood of the corporate world. They facilitate the seamless exchange of goods and services, helping businesses maintain supply chains, pay employees, and manage their financial obligations effectively. Without efficient B2B payment solutions, the global economy would experience a tremendous decline.
B2B payments is a broad term, but there are an abundance of different B2B payment methods companies can use to finalize transactions.
What are the different types of B2B payment methods?
B2B payment methods have evolved significantly over the years. In 2023, businesses have an array of options at their disposal, including:
Electronic Funds Transfer (EFT): EFT involves the electronic exchange of money between business accounts. This method is known for its speed and efficiency, reducing the risk associated with physical checks.
Automated Clearing House (ACH) payments: ACH payments allow businesses to transfer funds directly from one bank account to another. It’s widely used for recurring payments like payroll and bills.
Credit card payments: Many businesses accept credit card payments for B2B transactions. It offers convenience and can be a valuable tool for managing cash flow.
Wire transfers: Wire transfers are ideal for international B2B transactions. They involve the direct transfer of money from one bank to another, ensuring swift cross-border payments.
Checks: Physical checks still remain a very popular option for B2B payments. While it’s an inconvenient method of payment, in 2020, 80% of all B2B transactions were by check.
Whatever B2B payment method your company decides to utilize, there’s a lot happening in the B2B environment that could impact your business.
What’s going on in the B2B environment in 2023?
As the world advances in technology and cybercriminal activity, the world of B2B payments gets increasingly more difficult.
Issues with the B2B payment method
With the increasing reliance on electronic transactions, businesses face heightened security risks such as data breaches and fraud. While digital payments are much safer than manual/physical payments, the risk of cybercriminals obtaining personal information and stealing funds is prevalent. Protecting sensitive financial information is essential for maintaining the integrity of companies.
Cash flow management is another concern with the B2B payment method. Businesses often struggle with managing their cash flow effectively with B2B payments. Because of that, late payments and delayed transactions can lead to liquidity issues causing companies to potentially go out of business.
Trends in B2B payments in 2023
- Check-based B2B payments cost more than their benefits
While check-based B2B payments are still a popular method of payment, the disadvantages of utilizing checks outweigh the benefits and are slowly becoming less popular.
The biggest downside to checks is the fact that they are really inefficient. While a large percentage of businesses still prefer to get paid by check, the work that goes into the hassle of check payments is not worth it. First, businesses need employees to physically be in the office to run a check. This requires unnecessary resources to be spent just to accept a check as a proper method of payment. Next, companies have to pay for the cost of shipping when dealing with payments by check. While it is nice for businesses to accept checks as a form of B2B payments, there are better alternatives.
- Card-based payments becoming more popular with vendors
With the decrease in check-based payments, card-based payments have shown a dramatic increase in B2B payment trends. Since March 2020, there has been a 14%-16% increase in card-based payments. With less and less employees going into the office due to the work-from-home initiative during the Covid-19 pandemic, businesses have adopted card payments over checks for their ability to be accepted without physical contact.
Card-based payments come with many benefits which include:
- Speed and efficiency: Card payments are processed quickly, often in real-time or within a few business days, compared to the longer processing times associated with checks. This speed can improve cash flow and enhance financial management for businesses.
- Enhanced security: Card-based payments are generally more secure than checks. They often involve encryption, tokenization, and advanced fraud detection mechanisms, reducing the risk of unauthorized transactions and fraud.
- Automation and integration: Card payments can be easily integrated into accounting and financial management systems, allowing for automated reconciliation and record-keeping. Software like EBizCharge gives merchants the ability to automate payment processing directly integrated within merchants’ ERP, eCommerce, CRM, and POS software. This automation reduces the chances of errors and simplifies financial reporting.
- Convenience: Cards are widely accepted, both online and in physical locations, making them a convenient payment method for businesses. They offer flexibility in how and where payments can be made, providing greater convenience for customers and suppliers.
Whether companies choose to use card-based or check-based B2B payments, there is still always the risk of cybercriminal activity occurring.
- Cybercriminal activity continues to grow
2023 has come with an abundance of new difficulties for companies, one of those challenges being the rise in cybercriminal activity. Today, cyberattacks occur every 39 seconds and affect 30,000 unique websites daily. The rise in attacks has major implications for businesses. These attacks can lead to major data breaches, leading to the loss of valuable personal information, financial records, intellectual property, and potential trade secrets. The more businesses make transactions, the greater the risk their valuable information can be the target for a cyberattack. Businesses should make sure they use a well-trusted payment provider to mitigate the risks of cyberactivity.
While a few of these trends in B2B payments may be concerning for your company, there are ways to avoid these risks and help your business excel in the B2B world.
Things to look out for when choosing a B2B payment provider for your field service business
Selecting the right B2B payment provider is a critical decision for any field service business in 2023. In today’s fast-paced and digitally-driven landscape, where seamless financial transactions are paramount, making an informed choice is not just a matter of convenience; it’s a strategic imperative. The B2B payment landscape has evolved significantly, offering a plethora of options, each with its own set of advantages and considerations.
When selecting a B2B payment provider for your field service business in 2023, consider the following factors:
Payment freedom
It’s important to choose a provider that offers flexibility in payment methods to cater to the diverse needs of your field service business. A comprehensive solution should support various payment options, including credit cards, ACH, checks, and digital wallets.
Security
Prioritize security to protect your business and client data. Ensure the chosen provider complies with industry standards and offers robust encryption and authentication mechanisms to safeguard sensitive information. Look for providers to have Level 1 PCI compliance and are trusted as a secure provider.
Look for trusted providers
Select a reputable and well-established B2B payment provider with a track record of reliability and customer satisfaction. Research and read reviews to gauge their performance and credibility in the market.
