4 Steps For Optimising B2B Payments

4 Steps For Optimising B2B Payments

It is almost the end of the year, and while in some ways 2020 and 2021 sort of merge together in our public memory, the pandemic and it’s after-effects have accelerated the digital trend in b2b and b2c. While many were first hesitant to embrace the lifestyle that digitisation provided, being digital-first is now an indispensable part of business. Upgrading to the latest technology is no longer a want but a necessity. As a result, digital transformation is now more than a buzzword in most industries. While the industrial sector embraced it years ago, the service sector is also increasingly becoming more digitalised. One of the areas that have recently undergone massive digital transformation is payments.

The customer is always right

Take a moment to see how we pay for our clothing, french fries, or a new coffee table? Today, a large number of people make their payments over the internet, especially with the explosive growth of online shopping and D2C brands.

As most retail customers demand user-friendly, secure, and fast payment options, traditional banks and digital experts have focussed their efforts on developing processes to meet the needs of their customers. While significant steps have been taken to automate traditional banking procedures, little has been done to improve business-to-business payment experiences.

Business-to-customer (B2C) transactions are often believed to have reached historic heights, particularly during the pandemic. The truth is that they are still minuscule when compared to business-to-business (B2B) transactions. As per a UNCTAD report, in 2019, B2C e-commerce was estimated to be around USD 4.9 trillion. On the contrary, global B2B e-commerce was valued at USD 21.8 trillion in the same year. This provides a clear estimate of the potential in B2B payments and automation. Therefore, many new players have begun to work on ideas to develop and modernise payments for businesses.

Room for improvement

Before diving into how B2B payments can be automated, it is important to understand what sets them apart from B2C transactions. The following are some critical factors that have a significant impact on B2B payments.

1. The Number of People Involved in Decision Making

In a business firm, no payment decision is ever made by a single person alone. Every business transaction directly or indirectly has an effect on various stakeholders like customers, shareholders, managers, employees, and so on. Therefore, on average, five to seven stakeholders are involved when any payment-related decision has to be made.

2. Delays

When many people participate in the decision-making process, inevitably, there would be a delay in reaching a final decision. Since B2B payments typically include the opinion of 5 or more stakeholders, decision-making takes a longer time. In fact, delays in the payment cycle constitute a big problem for almost 30% of middle-market companies.

3. Volume

Unlike retail customers who purchase small quantities, businesses tend to buy in bulk from wholesalers. Buying in bulk not only allows them to get trade discounts but also enables them to sell large quantities to customers. Since their purchases are in huge quantities, the transactions are also worth several thousand.


Customers that shop in stores usually do it when they have a specific need. This could be a one-time purchase from a certain store over several months. Businesses, on the other hand, must always ensure that they have enough stock to offer their customers. That is why they make regular and recurring purchases, as they also prefer to build long-term healthy relations with their sellers.

5. Industry

The nature of B2B transactions, as well as the terms and circumstances that apply to them, differ from industry to industry. Each industry has its own set of laws, regulations, and payment requirements. Every contract is unique, and the delivery method, quality control procedure, invoicing, payment, and other terms depend on the industry’s generally accepted norms. As a result, B2B payments are far more complicated than B2C payments.

Despite these differences, the demand for faster and more efficient processes has grown in the B2B sector as well. Now, business owners and entrepreneurs also desire similar payment services that retail customers enjoy already. This would not only save them time and money, but it would also help them enhance their other business operations. As a result, banks and fintech firms are working hard to close the gap and provide useful solutions to the payment issues that businesses face regularly. According to a 2021 Statista report, 34% of companies all around the world have expressed their willingness to switch to fintech solutions.

How to solve the pain points of B2B payments 

To understand how to automate B2B payments, we must first identify the issues that businesses have with the current system. Delays, fraud, manual processing, and visibility are some of the most common problems with B2B payments. As a result, new B2B solutions must address and seek to resolve these difficulties. The following are some of the most important B2B payment trends for 2021.

1. Transition from manual processing to automation

A large number of companies still process payments manually. Manual processing is bound to have errors and may prove to be insecure as well. Moreover, it would take longer to manage all the payments manually. Instead of continuing to process payments inefficiently when done manually, it is better to invest time and resources in more efficient automated processing solutions.

B2B payment automation solves practically all the problems that come with manual processing. It provides more control and visibility over the transactions and, at the same time, saves operating costs and time. Adopting AR automation software, for example, allows a company’s accounts receivables team to automate repetitive and time-consuming processes while increasing their cash flow and collection efficiency. Instead, they can devote their time and energy toward more productive or strategic projects. Similarly, integrating a payment API (Application Programming Interface) with an ERP (Enterprise Resource Planning) software would help the company in managing the payments and sharing banking data in a safe manner. More than anywhere else, electronic transactions are surely a game-changer in B2B payments as they make them more efficient, secure, convenient, fast, and instant. Digital payments give buyers and suppliers various growth prospects by allowing firms to focus their time and resources on more profitable areas.

2. Managing risk through multi-factor authentication

As e-commerce and online transactions are growing, businesses are also increasingly complaining of cyberattacks and payment frauds. One of the ways to solve this problem and provide a platform for more secure payments is Strong Customer Authentication (SCA). It is a requirement of the European Union that was enforced in 2019 and has already been implemented by most member countries. Two-factor and multi-factor authentication are formed on the basis of the use of multiple ways of authentication.

These are:

Knowledge: an element that only the user is aware of.

Possession: use of a device that only the user possesses.

Inherence: something that the user is.

The extra layer provided in the form of multi-factor authentication blocks the access of hackers and scammers to company accounts and thus, protects data and offers secure payments. Apart from these, multi-factor authentication has numerous benefits. Some of them are:

  • It builds customer trust and confidence in the business by offering customer security.
  • It offers extra protection to sensitive information that passes through a company. Thus, it reduces the risk of unauthorised access and hacks.
  • Extra security offered by multi-factor authentication reduces the risk of processing fraudulent payments.

3. Overcoming payment delays

As mentioned earlier, payment delays are a major issue that most middle-market businesses have to deal with. According to a study, 44% of B2B SMEs said that late payments seriously hamper their business performance. Such delays in payment not only impact the company’s cash flow but also affect their reputation and relations with clients and suppliers. There could be various reasons for payment delays, such as insufficient funds available at a given point, long payment terms, and outdated payment methods.

Accepting digital payments simplifies, speeds up, and simplifies the process of payment processing. It enables companies to make rapid and error-free payments. Via electronic payments, they can keep track of late payments and also automate payment schedules.

4. Improving visibility

Most businesses do not have end-to-end visibility over their transactions. This means that they can only assume that their incoming payments are on time and their outgoing payments are reaching their destination before prescribed deadlines. Using digital systems, businesses are able to view every payment as it goes through the system. It gives businesses greater predictability and control over cash flow, business relations, and operations.

To summarise, B2B payments can be optimised by automating them. Digital payments provide numerous benefits like better security, faster processing, real-time updates, end-to-end visibility which help businesses provide the right payment experience for customers and also for their internal employees.