INNOVATION

23/11 B2B Payment Solutions: streamlining transactions

Let business customers get the D2C treatment they are craving. Hey Flatline Fam, if you thought our last piece on elevating B2B customer experience was important, well… you’re right. BUT, every Customers purchase comes with a payment, so today we’ll be talking about the nitty-gritty of B2B payments – what they are, how they differ...

Last updated: 23 Nov 2023 - 7 mins read

Sophie Marketeer

CONTENTS

Let business customers get the D2C treatment they are craving.

Hey Flatline Fam, if you thought our last piece on elevating B2B customer experience was important, well… you’re right. BUT, every Customers purchase comes with a payment, so today we’ll be talking about the nitty-gritty of B2B payments – what they are, how they differ from B2C, the most popular methods, and how to keep those transactions smooth and secure. Let’s get into it!

What’s the deal with B2B Payments?

First off, let’s break down what B2B payments are. Unlike B2C transactions, where consumers directly purchase from businesses, B2B payments are all about the money flow between businesses. This could be for services, supplies, you name it. The B2B payment market is booming, with sales expected to hit a staggering $88 trillion in 2023. That’s a lot of zeroes!

B2B transactions often involve larger quantities and higher values compared to B2C transactions. This is because businesses usually purchase in bulk or subscribe to services on a larger scale. They often involve multiple steps, including purchase orders, invoices, approval processes, and sometimes extended payment terms. If we look at methods, we have bank transfers, credit lines, electronic funds transfers (EFT), Automated Clearing House (ACH) payments, and sometimes checks. Credit card payments are also used, but less frequently due to higher transaction values and processing fees. Most of the time B2B eCommerce payments are integrated with other business systems like Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) systems. This integration helps in managing the complex workflow of B2B transactions. So if we look at eCommerce platforms in that manner, given the high value of transactions, they need robust security measures to prevent fraud and ensure the safe transfer of funds.

But let’s take a closer look at these points.

B2B vs. B2C: Spot the Difference

The main difference between B2B and B2C payments lies in the methods used. While B2C often sees instant payments via credit/debit cards or digital wallets, B2B transactions are a different ball game. They often involve larger sums and more complex processes like invoices and extended payment terms. It’s not just about clicking ‘pay’ – there’s a whole dance of documentation and approvals. While both B2B and B2C payments serve to facilitate the exchange of value, they operate under different dynamics and cater to distinct needs of their respective markets.

Popular B2B payment methods

So, what’s hot in the B2B payment world? Here’s the rundown:

Checks: Old school but still in the game. About 40% of B2B payments in the US are made via checks. However, they’re not without their downsides – think lost mail and time-consuming processes.

ACH Payments: These are great for large transactions but can be slow since they’re batch-processed.

Credit/Debit Cards: Gaining traction in B2B, but watch out for those processing fees!

Wire Transfers: Quick and direct, but they require accurate details from the buyer.

Digital Payment Services: Think PayPal, Venmo, Apple Pay. They’re user-friendly and increasingly popular.

The B2B payment process

The process typically starts with an invoice, leading to various payment methods like checks or electronic transfers. It’s a dance of documentation, approvals, and sometimes, a bit of waiting. The process typically begins with the issuance of a purchase order by the buyer, followed by the delivery of goods or services by the seller. The seller then issues an invoice, which is subject to approval by the buyer’s accounts payable department. Payment terms, often ranging from 30 to 90 days, are agreed upon, and the payment is processed through methods like bank transfers, ACH, or checks. This process is heavily reliant on documentation and often requires integration with various business systems for efficient management, tracking, and compliance purposes.

Fraud prevention

Be aware of payment fraud! B2B transactions need tight security measures. This includes strong authentication processes, risk analysis, and staying vigilant against common fraud tactics like account takeovers or credit card fraud.

B2B payment platforms

Enter B2B payment platforms – the digital solution to streamline this whole process. Platforms integrate seamlessly with B2B transactions, offering a range of payment methods and currencies. They’re about making life easier for both buyers and sellers. B2B payment platforms are designed to streamline this complex process. These platforms offer solutions for automating invoicing, processing payments, managing cash flow, and ensuring compliance with regulatory standards. They often provide tools for electronic invoicing, digital payment processing, and integration with accounting software, thereby reducing manual effort and increasing efficiency. A notable example is Shopify Payments, which, while predominantly known for its B2C capabilities, also offers B2B features. Shopify allows businesses to create wholesale storefronts, manage bulk orders, and offer custom pricing, catering to the unique needs of B2B transactions.

Shopify: Our Go-To platform

Shopify stands out in the B2B payment arena. It’s not just about accepting a variety of payment methods; it’s about a seamless integration that makes the transaction process smoother than your morning latte. Plus, with built-in fraud protection and the ability to handle multiple currencies, Shopify simplifies the B2B payment process. By integrating various payment methods and providing tools for managing the entire sales process, from order placement to payment, Shopify handles the process within a single ecosystem. This adaptability showcases the evolving nature of B2B payment platforms, which are increasingly embracing flexibility and user-friendliness to accommodate the complex needs of business transactions.

Automating B2B Payments: The Future is Here

According to Shopify, the traditional B2B payment process, which often involves manual tasks like processing paper orders and cashing checks, is time-consuming and inefficient. However, automation is changing the game.

Streamlining with digital platforms

By automating the payment process, businesses can save significant time and resources. For instance, Shopify allows for the creation of draft orders and offers competitive B2B payment processing rates, streamlining the entire order process.

Automated invoice management

One of the biggest pain points in B2B transactions is invoice management. Shopify addresses this by offering automated invoice reminders and the ability for buyers to download invoices for previous orders through their online portal. This not only speeds up the process but also reduces the likelihood of errors and delays.

Flexible payment terms

Negotiating payment terms is a critical aspect of B2B transactions. With automation, businesses can set and manage these terms more efficiently. Shopify’s platform allows for the customisation of payment terms for each buyer, ensuring that each transaction is tailored to specific needs and agreements.

Mobile payments and digital wallets

The rise of mobile commerce is also influencing B2B payments. More businesses are using mobile devices for transactions, necessitating the acceptance of various mobile payment methods. Shopify Plus enables mobile payment options like Shop Pay, PayPal, Venmo, and digital wallets such as Apple Pay and Google Pay, making transactions more accessible and convenient.

Reducing fraud with automation

Shopify Plus comes with built-in fraud protection, using advanced algorithms to verify payment cards. This is crucial in the B2B space, where delayed payment terms can increase the risk of fraud. Automated systems help in early detection and prevention of fraudulent activities.

The Impact of automation on B2B payments

The shift towards automation in B2B payments is not just about convenience; it’s about transforming how businesses interact and transact with each other. Automated systems lead to faster processing times, reduced errors, and improved cash flow management. They also enhance the buyer experience, making it easier and more secure to complete transactions.

Wrapping it up

B2B payments might not be the sexiest topic, but they’re crucial in the business world. With the right tools and knowledge, you can streamline these transactions, making life easier for everyone involved. And when it comes to choosing a platform, Shopify is a solid bet for keeping those transactions smooth, secure, and hassle-free.

Stay tuned for more insights in our “November Enterprise Commerce” series. Next time we’ll be looking in the future, or maybe not? We’ll see what we can already do with AI in Enterprise Commerce.

We at Flatline Agency, official Shopify Plus Partners, are here to help you take your business to the next step, including custom development, design, and marketing. If you are interested, please feel free to contact us.

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