B2B payment solutions: Everything you need to know

As a business owner, you should provide customers with a convenient way to pay you. 

Business-to-business (B2B) payment solutions are digital transaction methods used between companies. They include methods such as Automated Clearing House (ACH) transfers, credit and virtual cards, and wire payments and digital wallets—and they can help streamline payments while improving efficiency.

Relying on dated B2B payment methods, like cash- or check-only payments, may introduce unnecessary inconveniences and growth limitations to your business.

Keep reading to determine whether digital payment solutions are the right option for your business.

What you’ll learn:

• B2B payments are transactions between businesses, usually via bank transfers, digital wallets or checks. Some methods offer faster processing and greater security.

• Adopting digital B2B payment solutions can help streamline transactions, enhance customer satisfaction and position your business for growth.

• Business payment solutions from Capital One provide real-time tracking, enhanced security, flexible expense management and more.

B2B payments are transactions between businesses, such as a manufacturer supplying inventory to a wholesaler or a wholesaler providing goods to retail sellers. Unlike B2C (business-to-consumer) payments, they’re often—though not always—made on a recurring basis and billed in arrears, which means the client pays after the services or goods are delivered.

With this billing method, the client may receive an invoice during or shortly after delivery and has a set number of days in the billing cycle—typically 30 to 90—to pay it. Since B2B payments often rely on invoicing and billing cycles, it may take weeks—or longer—for you to be paid for the services or goods you provide.

A typical B2B payment workflow might work like this:

1. A seller sends an invoice after the buyer and seller agree on a price.

2. The buyer’s internal systems handle payment approval.

3. A payment is initiated.

4. The payment is processed and settled via wire transfer, ACH, credit card or digital platform.

5. The transaction is reconciled when both the buyer and seller update their financial records.

Depending on how the payment is sent, it can take a few hours to a few days to finish processing, with some methods being faster and more secure than others.

B2B payments usually involve multiple departments in both businesses (like accounts payable and procurement) and financial institutions that approve and process the payments, further delaying the deposit. The bright side is that you can use several different payment methods for B2B payments, some of which may help speed the process or provide other benefits.

There are several B2B payment methods, including digital options. Some popular types include the following:

• Digital options: Secure and convenient digital payment gateways or platforms allow clients to pay for their purchases online. However, they may take time to process, and digital payment platforms often charge fees for their services. Some examples include ACH payments and digital wallets like PayPal®.

• Debit or credit card payments: Accepting card payments allows suppliers to receive revenue almost immediately and simultaneously allows buyers to pay the transaction off over time if needed. Businesses that accept cards for payment may pay a small fee for each transaction and must possess the equipment necessary to take card payments. One-time business virtual credit cards also fall into this category.

• Wire transfers: A wire transfer is one of the most immediate B2B payment methods, with money typically available within a few hours. They are secure between-bank payments routed through a financial network and facilitate direct transfers of large sums with minimal risk of fraud or delay.

• ACH transfers: ACH transfers are secure, reliable payments between two banks and may take a few days longer to process than standard wire transfers.

• Cash: Cash is often one of the fastest payment methods and typically doesn’t include extra fees or costs. However, it does have risks. Money may be lost, stolen or damaged without proper safe storage options. Paper currency can also be counterfeit.

• Checks: Whether paper or electronic, checks are often slow and sometimes not very secure. Paper checks may be lost, stolen, damaged or returned due to insufficient funds. Electronic checks, while more efficient, may still be subject to processing delays and potential fraud, making them less reliable than other digital or electronic payment methods.

Effective B2B payment practices typically include digital payments, automation and robust security measures.

Physical checks or cash payments can be misplaced, overlooked or recorded incorrectly during bookkeeping. Digitizing B2B payments can help minimize the risk of human error and support more accurate recordkeeping.

With digital and automated payments, payment systems can maintain an accurate and detailed record of each payment. Some services may even integrate with your accounting software, helping streamline internal recordkeeping and simplify tax-related processes.

Automating B2B payment processes is more efficient and helps streamline accounting processes that can positively impact your business overall. With automated payments, employees can spend less time handling, processing and recording physical payment methods or correcting human errors during those processes, freeing them up to focus on more critical tasks.

For similar reasons, B2B payment automation may also benefit your clients, as digital payments are often faster and easier for their accounting teams to track and record. Overall, B2B payment automation can help reduce labor demands, lower processing costs and minimize errors associated with manual payment handling.

B2B payment automation can help businesses better monitor cash flow and manage client relationships. By replacing manual payment methods, digital and automated payments offer more security and reliability than cash or checks, which may be damaged, go missing, bounce or be fake. This helps preserve your earnings and minimize losses.

Many automated payment services also provide your business with detailed reports to help you monitor your cash flow. These reports can help you identify patterns and plan accordingly. Reports may also offer insights into your clients’ payment trends and reliability, which can support more-informed decisions about contracts and payment terms.

Sending paper checks or cash through the mail may leave you and your clients vulnerable to unfortunate situations. Payments may be stolen or tampered with, or sensitive information displayed on checks may be recorded and used for nefarious purposes. Digital B2B payment methods can help reduce these risks by limiting physical handling and exposure.

Reliable payment gateways and platforms typically employ dedicated security teams and advanced safeguards to protect payments and sensitive information against hackers or data breaches. It’s also considerably easier to track payments digitally than through paper mail.

The best payment solutions typically help you: 

• Track and pay invoices more efficiently

• Manage cash flow better

• Flexibly control employee spending

• Manage liability, compliance and other financial risks

You can get all this and more with business payment solutions from Capital One—cloud-based payable solutions designed to help simplify invoice processes, save you time, improve your cash flow and benefit your vendor relationships by minimizing manual processes with innovative technology.

For example, with Merchant Services from Capital One, businesses can accept payments from major credit cards, gift cards and loyalty cards using swipe, EMV and contactless methods. Platforms like PayPal, Apple Pay® and Google Pay™ are also accepted.

Capital One payment-processing solutions provide access to your payments, typically as soon as the next business day. Transparent account reporting and a suite of data security tools are available to help you stay on top of your business’s cash flow and clients’ experiences.

The cost of doing business is real; finding ways to minimize expenses while maximizing efficiency is often critical to the health of your business. Transitioning to digital solutions can make transactions smoother, improve cash flow, simplify accounting processes, save time and offer more security than traditional B2B payment methods.

If you’re ready to transition from dated B2B payment solutions to a digital solution platform that may even earn you rebates and rewards for your organization, check out Accounts Payable Solutions from Capital One today.