How we manage payments between businesses has come a long way in recent years and it doesn’t look like industry innovations are going to slow down any time soon. We’re on hand to keep you up to date with the latest B2B payments tech, what the future might hold, which methods are best for your business, and how you can implement effective credit control solutions.
Popular Types Of B2B Payments And Which Businesses Should Use Them
ACH – American Clearing House
One of the most popular types of money transfer that works by direct bank transfer from one account to another. It’s estimated that around $2 billion in payments are sent using this method each year and it’s an incredibly cost-efficient and user-friendly way to make payments.
Perfect for: Organizations that deal in large bulk transfers of cash like insurance companies, lenders, e-commerce stores, and commercial landlords. Plus, you get additional security as ACH can usually be reversed. Bear in mind, though, you can only use ACH within the US and it can’t be used for international payments.
Similar to ACH, wire transfers are another form of electronic payment. These have the added benefit of being able to send money internationally and have a faster turnaround time.
Perfect for: Businesses that need to make fast payments. It’s a little more expensive to use wire transfers, usually $10 – $35 per transaction, but the vast majority of payments will arrive within 24 hours – often on the same day.
Digital Payment Platforms
Platforms like PayPal, Venmo, and Google Pay are becoming increasingly popular methods to transfer money B2B. These providers offer convenient, safe, and low-risk methods of transferring money.
Perfect for: Small and medium-sized enterprises that carry out lots of transactions online via an e-commerce store. Most website builders have plug-ins for popular payment platforms, allowing users to seamlessly integrate them into their business. Watch out for fees as you’ll be charged per transaction.
New And Future B2B Payment Trends
While still very much in its infancy, we’re seeing a steady rise in B2B payments using cryptocurrencies like Bitcoin, Ethereum, and other blockchain technologies. 2021 has seen renewed institutional interest in crypto alongside a steady stream of businesses starting to accept digital currency as payment.
It’s still a fringe choice for B2B payments, sure, but we wouldn’t be surprised to see blockchain tech drive innovation in the space. Blockchain could provide lightning-fast transactions, provide total flexibility by removing banks and institutions from the equation, allow instant global payments, and add an additional layer of security.
This is definitely a technology to keep an eye on in the coming years.
Use Of AI
Machine learning is starting to become more widely utilized across multiple industries, and B2B payments are no exception. We’re still in the very early days but we can expect to see innovations like accounts analysis, automatic adjustment of pricing during the procurement process, and a way to manage huge amounts of data across your supply chains. Make sure you don’t get left behind and start researching options today.
Rise Of Virtual Card Payments
Not only have paper checks all but died out in the B2B world, but we’re now also seeing the beginning of the end of physical payment cards. We could see a big shift towards fully digital card payments in the future as a way to improve the accounts payable process, allow for more convenient mobile payments, and as a tool to manage company credit cards in a more secure way.
How To Manage Your B2B Payments And Credit Solutions
Now that you’ve got an understanding of the types of B2B payment methods that currently exist and what the future might have in store, it’s important to manage your credit solutions. This includes how you chase up B2B payments owed to you as well as finding the best ways to manage your own outgoings. We’ve covered some key tips below.
If you’re struggling to meet payments to your creditors, you might want to consider a debt settlement agreement. You’ll negotiate to pay a reduced portion of the debt over a longer period of time. In many cases, creditors will prefer to use this method to be sure of receiving at least some income.
Debt consolidation is a great option to pay off all of your B2B creditors in one go. By taking out one simple loan to cover all of your debts you can much more easily manage payments. Rather than struggling to pay lots of individual suppliers, you now have just one loan to repay.
Automation of your B2B invoices is an absolute lifesaver and can lead to lower costs, more efficient collection of your accounts receivable, and the flexibility to manage multiple different payment types. Plus, it frees up your time to focus on the more important aspects of the day-to-day running of your business.
Be Customer Focused
Maintaining strong business relationships is vital to the success of any organization and this is true for both your customers and suppliers. Try to be as flexible as possible with your B2B payment methods so you can cast as wide a net as possible to bring in the best suppliers and partners.
Monitor Debtor Days
Always keep a close eye on your debtor days; this is how long it takes for you to receive payment from the day the service was provided. The average turnaround is usually around 30 days, but you can install monitoring systems to analyze which suppliers are taking longer.
Track those that are taking longer than average and work with clients directly to discuss solutions.
While there’s a huge range of B2B payment options and ways to manage your credit, it’s actually easier than you might first think to get a handle on things. Use the most convenient methods for you and your B2B clients and partners and make sure that you stay up to date on developments in the industry.
We can expect some big changes in the near future and the organizations that stay ahead of the trends will come out all the stronger for it.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.