B2B Payments Guide & The 10 Best B2B Payment Solutions for 2020
2020’s Top B2B Payment Solutions
- Digital River
B2B payments are payments made between two vendors in exchange for products or services, where one vendor pays the other in the form of a paper check or digital payment. While paper checks are still the most common B2B payment type, digital options like ACH payments, wire transfers, business credit cards, and virtual payment platforms are gaining lots of traction thanks to their convenience and added security.
Modern business is changing the way B2B payments are made. Gone are the days of the paper check as automation is the driving force behind how we get paid. Paper checks have been almost completely replaced by electronic payments in the consumer arena, but business-to-business payment options have been slower to evolve. Nevertheless, there are many payment methods business owners have today to send and receive funds.
If you’re thinking about moving to digital payments and purchasing a B2B payment system, consider these top ten to get the wheels turning:
B2B Payment Methods
1. ACH (Automated Clearing House)
B2B digital payments can be sent through America’s Automated Clearing House (ACH) network. Although transactions don’t occur in real-time, they are typically faster than older hard-copy payment methods.
An ACH payment moves electronically from one bank account to another. To perform an ACH transfer, you have to connect accounts using routing and account numbers. Because of this small amount of red tape, ACH transfers are best for recurring transactions.
ACH payments are known for their tremendous cost savings. In fact, some financial institutions will charge nothing at all, while others may charge less than a dollar per transaction.
These are a few of the reasons why ACH transfers are one of the most popular B2B payment solutions today. They will most likely be more common than paper checks in B2B transactions within a few years.
ACH payments appear on a bank account’s statement at the end of the month so they are a good way to manage cash flow and settle accounts payable. They can also be integrated into a business’s enterprise resource planning (ERP) system.
Although the ACH network provides a very convenient digital payment option, it does have a few quirks that need to be properly managed. First is the fact that only US-based financial institutions can be used. Second, ACH transactions are conducted in multiple batches per business day. This means that there will be a daily cut-off time, after which a digital payment cannot be processed until the following business day.
2. Wire Transfers
For real-time payments, businesses often use wire transfers. Although a wire transfer is an older payment system, it can still be used for ecommerce and other digital transactions. In fact, it has several advantages over the ACH network.
For instance, international payments can be sent using a wire transfer. Once the funds land in the receiving account, they’re available immediately. Because the batch system is not used for wire transfers, there is a faster turnaround time.
Wire transmissions have the best payment terms and cost effectiveness for businesses that are looking for a one-day turnaround. There may still be a daily cut-off time, however.
There are two types of wire transfers: cash and digital. The former is the older method where cash is sent to a cash office for a recipient to collect. The latter is the type businesses will want to use to send funds electronically from one bank account to another.
3. Business Credit Cards
Instead of making immediate payments, a firm can instead make a B2B payment on credit. Credit card payments provide a convenient and inexpensive way for businesses to send funds to each other and meet invoicing demands. Card payments can be easily tracked at the end of the month with a statement that is sent from the issuer either electronically or through the postal system.
Although interest charges can be assessed against revolving balances, card issuers are required by law to give their cardholders adequate time to pay off their balances to avoid any interest. Because the annual percentage rates (APRs) charged by credit card companies can become a little excessive, it’s advisable to pay off your balance in full each month. Treat it like a debit card.
Due to the risk of cyber crime, several credit card issuers also offer one-time-use numbers. Because these can be used just a single time, if cyber thieves were to obtain the numbers, they wouldn’t be able to use them. Such single-use virtual cards are attached to a regular card, which means all transactions appear on a single statement at the end of the billing cycle.
4. Virtual Payment Platforms
Another B2B digital payment option is using an online payment platform from a fintech company. Organizations like PayPal offer multiple online resources that can be used to electronically transfer money from one account to another.
These transfers are typically performed between platform accounts for more real-time transfers–avoiding the use of traditional bank accounts. However , it’s possible in many cases to use traditional financial institutions or credit cards on a payment platform.
Some virtual payment platforms are exclusively available as mobile apps– for example, Venmo is only available as an app. Some are available as both–you can use PayPal on mobile or on your computer.
Using a virtual payment platform for digital B2B payments does have a few drawbacks. Fees may be assessed for sending and receiving funds. And these charges can be higher than those incurred using other forms of digital payments.
The Top 10 B2B Payment Solutions
Headquartered in San Francisco, Stripe is one of the most popular electronic payment systems on the planet. They focus on ease of use with an open API that helps to streamline the payment process and avoid bottlenecks.
Stripe is super simple to set up, maintain, and integrate. It’s easy to use and customize in any way possible. Customers are also never redirected away from the page to make a payment. It’s a straightforward process.
Although Stripe has some subscription management tools available, you need to use the open API to integrate a more robust service. Therefore, you must have someone on staff who can use it. The system lacks some basic solutions that an e-commerce business needs.
Small business owners who seek to process a lighter volume of invoices. It’s also an ideal solution for a business that employs developers who can get creative with an open API.
Netsuite is a robust accounting platform with supply chain inventory management and the functionality of a customer relationship management (CRM) tool. It’s a great platform to report on as much customer data as possible.
Netsuite is a subsidiary of the big tech brand Oracle. You purchase a Netsuite license based on your business needs, so the platform is highly customizable. It’s also perfect if you study trends and use real-time data to forecast business.
NetSuite has a rather bland user interface that customers don’t always find engaging. This contributes to a reputation that does not include ease of use.
Netsuite also gets very mixed reviews online for customer service and support. The system does not come with a merchant account or payment gateway. It’s built as a full-service accounting suite to coincide with a payment platform.
A company that makes good use of analytics and reporting. Utilize the data gathered to gain a clearer understanding of how customers move through the payment process and how it impacts your infrastructure.
Reach more buyers and drive higher conversion with the Braintree online payment solution. Like Stripe, Braintree offers a “pay-as-you-go” plan for ultimate flexibility.
The accounting software brings together a wide range of cross-border support and payment methods under one single platform. It also connects with third-party payment gateways through an open API. This enables a business to accept all types of payments.
Braintree does not have the strongest reporting and analytics features. If you run a business that relies heavily on data for decision-making, this platform may not work. Because of the transactional nature of the billing, it can get pricey as your business grows.
Braintree is best for SaaS companies to manage their subscription payments. This makes it an attractive solution for an organization that doesn’t mind the “charge-per-transaction” business model.
Chargify is a subscription-based management platform that focuses on supporting organizations with complex billing processes that change frequently. They bill a base monthly price plus a percentage of your monthly revenue.
The main advantage for B2B e-commerce is the ability to work with various payment gateways and financial institutions. The platform is user-friendly and lacks costly setup and transaction fees. Users of Chargify can be confident they are always complying with tax laws and that the billing is correct.
You must integrate a third-party payment gateway and a merchant account (or bank account) to use this business-to-business system. It focuses more on subscription analytics and recurring billing than anything else.
The Chargify system is a good payment option for a business with an existing payment infrastructure that wants to get a better handle on subscription management. The platform enables a company to test out different pricing structures quickly and efficiently.
Recurly is a B2B payment solution that has robust subscription management. They offer five different billing models to help a brand tailor their pricing to the specific product or service you sell.
The system makes it easy to add and maintain different payment options, including credit card processing, mobile payments, and Automated Clearing House (ACH) wire transfers.
Recurly requires a third-party payment gateway to process B2B payment methods. It also requires a separate merchant account for ACH payments and credit card payments.
Recurly is best for a subscription-based business that is focused on better cash flow management. It offers revenue recognition tools with additional data management features for more refined analytics.
Cleverbridge is an ERP solution that helps to control your pricing strategy across every customer touchpoint. It’s a global e-commerce platform that facilitates transactions in the payments industry.
Cleverbridge is one of the only platforms for B2B transactions that has its own payment gateway and merchant account. They offer custom pricing plans with extensive subscription management.
If you plan on tracking revenue recognition, it is not offered by the Cleverbridge platform. Customers have also stated the breadth of the tool can be overwhelming.
If your business is in a place where you understand what you want from a payment platform, Cleverbridge’s variety of features can help you build out a tool that’s tailored to your exact needs.
The Chargebee system supports 480+ recurring billing use-cases to ensure a company is future-ready today. A business can find everything they need to streamline recurring payment options and automate invoicing.
Chargebee can be used to refine pricing strategy as a business grows. Known for ease-of-use and stellar customer service, is is the first payment platform to offer a “freemium” tier for businesses doing up to $50k in revenue. That means less processing fees for the smaller guys.
Like many other business payments brands, Chargebee does not offer a payment gateway or merchant account. Those must be set up separately.
Chargebee is the perfect B2B payment processor for mid-sized businesses. The system handles complex payment terms and pricing structures while offering a full suite of subscription-management and billing tools.
8. Digital River
Using global expertise to fuel and optimize commerce, Digital River opens doors to new payment avenues and sales opportunities. It’s an all-in-one SaaS billing platform with a diverse feature suite and reliable product offering.
Digital River targets enterprise consumers and offers a wide variety of benefits and features. Everything about the system is customized to effectively fit larger operations. This includes a merchant account and subscription-based management. It is one of the only brands on the market to offer it all.
Digital River has very limited account customization options. Additionally, pricing is not transparent and is only available upon request.
Digital River is best for a business that wants to offer specific solutions to its finance teams. Mainly an enterprise solution, the platform is designed to accommodate larger brands.
Specializing in business process automation, Apttus is a fintech company that focuses on improving customer experience and the payments process. The sales-oriented tool also boasts optimized billing and subscription management.
Apttus helps manage payments throughout the entire sales process, from the first contact to a completed transaction. It’s the perfect tool to track exactly how customers move through the sales funnel.
Since the platform is oriented around sales, it may lack some customer retention features like other brands on this list. It will also require integration with a third-party payment gateway and merchant account.
Apttus is perfect for any company looking to visualize the end-to-end sales process. When you can see movement in its entirety, a business can easily diagnose potential issues and make more informed decisions.
A robust subscription management program, Zuora offers a wide range of customization options to elevate your payment experience.
Zuora is built to manage the entire consumer lifecycle and payment cycle. The system will process payments with a large array of add-ons and customizable features to build a tailored solution for your brand.
Pricing is not transparent and only available upon request. You will also need a separate merchant account and payment gateway to get started. Reviews online state the system can have a sharp learning curve.
A business looking for a more complex solution. Although it may take a little more training with staff, Zuora is suitable for an organization of any size.
Managing Risk of B2B Payment Solutions
The increase in digital payments processing has unfortunately been accompanied by an upsurge in cyber crime. This fraud risk can be mitigated if appropriate steps are taken.
The digital payments process needs to be secured with technical safeguards as much as possible. For example, businesses that rely on digital payment processing should only use secure networks to send and receive funds. They should also track both incoming and outgoing transactions to verify all payments and not only rely on their provider to do the tracking.
Despite the risks, B2B digital payments are here to stay, providing a greater level of safety than cash and checks and helping businesses become more agile.
Consider your top three primary needs from a payment processing platform as well as the size of the business. A smaller brand may not require all the bells and whistles offered by a complex solution. With proper research, you’ll never get stuck paying more for a software platform than you should, and are more likely to find the best fit.