What are B2B payments?
B2B payments, or business-to-business payments, refer to the financial transactions that occur between two companies for the exchange of goods or services. These payments can be made through various methods, such as cash, check, ACH, credit cards, wire transfers, or electronic payments via fintech platforms such as PayPal or Venmo.
With B2B payment automation, it’s possible to streamline this process – making it faster, more secure, and more cost-efficient for businesses to manage their accounts receivable and improve cash flow.
Committing to B2B payment automation
The digitization and automation of B2B payments presents a tremendous opportunity for businesses in 2023, with the potential to create significant cost efficiencies and greatly improve customer experiences by applying a modern approach to accounts receivable (AR). Reflecting how money moves in today’s digital-first world, this digital transformation of B2B payments will become a priority as businesses search for solutions that positively impact their bottom line while facing economic headwinds.
Investment in automated B2B payments should come as no surprise given the rapid near-term growth expected in the market. In fact, Adroit Market Research expects the market for accounts receivable automation to reach $4 billion by 2025. And studies have shown that businesses creating the best experiences for their customers significantly outperform industry peers, nearly doubling the S&P stock performance of those with poor customer experience ratings between 2019 and 2022.
Based on years of experience, our Carat team is a leading innovator in B2B payments, and have built SnapPay, our strategic solution that helps businesses integrate payments directly within their existing workflows and technology platforms to help improve efficiency, security, and reduce costs.
Benefits of automated B2B payments
The ability to automate B2B payments presents a wide range of advantages for businesses. The following sections explore different ways automation can help improve operational efficiency, strengthen financial security, optimize cash flow management, and promote stronger relationships with partners. By examining these benefits, businesses can better understand the potential of B2B payment automation in driving long-term growth.
1. Streamlining business operations with tight integration to ERP Systems
Imagine putting your accounts receivable (AR) on cruise control. That is the goal of integrating your B2B payments capabilities directly with your firm’s enterprise resource planning (ERP) system. Taking this holistic approach to B2B payments will allow for streamlined payment reconciliation across multiple payment types and channels, and free up additional resources by creating transparency between both your buyers and suppliers.
SnapPay is a cloud-based AR solution with process-level integrations to ERP systems offered by JD Edwards, Microsoft Dynamics, Oracle, SAP and others. Its open API platform, which can integrate with any ERP system, allows businesses to extend the accounts receivable and accounts payable process beyond the ERP and into supply chain – facilitating the movement of funds in a manner that is seamless, secure, and reduces the cost of doing business.
For example, we worked closely with Brewster Home Fashions, a home décor company, to deploy SnapPay that integrated with their ERP system (SAP), allowing Brewster’s customers to present and pay invoices online faster and more securely.
2. Building trust through enhanced security
Businesses today work at warp speed, and digitally transferring funds is how the business world operates. To earn the trust needed to share payments with suppliers and vendors, global businesses need to have processes that account for payments across borders. Heightened security layers must be addressed in order to build trust throughout this payment process. A few ways to accomplish this include:
- Tightly integrated point-to-point encryption devices which reduce PCI footprint
- Re-encrypting existing card on file payments to minimize customer re enrollment
- Only exposing relevant data to the online environment
A short time ago, we began working with Mizuno USA, a sports attire and running shoe manufacturer, to improve security and raise productivity while reducing DSO and processing fees. SnapPay, which integrated with JD Edwards for Mizuno, streamlined the checkout process, reduced processing fees by 20 percent, and increased customer satisfaction.
3. Improving cashflow through collaboration
When it comes to B2B payments, time is of the essence. Reducing the time it takes to pay suppliers and vendors provides working capital and boosts customer satisfaction. Instead of having to track down invoices and payments, automating B2B reconciliations means that suppliers and vendors will be comfortable knowing that payments are coming their way. Reducing Days Sales Outstanding (DSO) and increasing transparency in the B2B payments flows means that AR departments can focus on higher-value business activities, something for which all companies strive.
One of our customers, Pollock Paper, needed to deploy an advanced SAP-integrated ecommerce solution. Our integrated payment solution, SnapPay, secured Pollock Paper’s credit card and ACH payments, boosted cash flow with streamlined, integrated enterprise payments, and created immediate productivity and cost reduction.
4. Creating a better experience for suppliers and vendors
B2B accounts receivable automation significantly enhances the experiences of suppliers and vendors by streamlining various aspects of the payment process. Automated payments lead to quicker responses to inquiries, ensuring that both parties have a clear understanding of invoice and payment statuses. Real-time visibility into transactions also keeps suppliers informed and satisfied. Moreover, automation shortens payment cycles, ensuring suppliers receive payments promptly and accurately, reducing key metrics like Days Sales Outstanding (DSO).
By minimizing errors, reducing penalties, and consistently meeting payment deadlines, businesses can maintain positive working relationships with their suppliers and vendors, ultimately contributing to long-term success.
Types of B2B payments
B2B transactions can be made through various payment methods, each with its own unique characteristics:
- Cash: Traditional physical currency used for in-person transactions
- Check: A written order directing a bank to pay a specified amount to a designated recipient
- ACH: Automated Clearing House is an electronic network for processing transactions between banks
- Credit cards: A widely accepted payment method allowing businesses to borrow funds to pay for goods and services
- Wire transfers: An electronic transfer of funds between banks, often used for large or international transactions
- Electronic payments/fintech: Digital payment platforms such as PayPal and Venmo that enable easy and secure online transactions
Serving as a strategic B2B payments partner, our team is optimizing B2B payment operations on behalf of our clients. To learn more about SnapPay, contact our experts today.
