The importance of payment solutions for Business-to-Business (B2B)
Business-to-Business (B2B) payment solutions are becoming an increasingly popular team and somewhat controversial. B2B payment solutions are a virtual payment processor that can vary in forms from commercial cards to online payment tools. A B2B payment solution will typically integrate with a Company’s ERP / CRM / POS software and manage / process the actual payment to suppliers. While they do offer a lot of benefits such as faster payment times and increased visibility, they also vary in processing costs both felt by the Company and Supplier. This will take a quick look at why more companies are implementing B2B payment solutions.
While each B2B payment solution is different, here are three of the key reasons why Companies are signing on:
- Secure Payment Processor
- Increased Visibility & Reporting
- Reduced Processing Costs
Every month, another news story seems to break about a large cyber security breach and lost credit information. It is costly and time-consuming for any company to keep up with the latest cyber-security threats and prepare the appropriate defenses. B2B payment solutions specialize in handling sensitive credit + payment information and have more resources and focus to do so. Signing on with a reputable B2B solution can help mitigate risk for both the Company and Suppliers.
When a Supplier is frustrated over a late payment, they often reach out to their go-to contact for a status update and explanation – in many situations, a buyer or Procurement representative. Fielding these inquiries takes valuable time out of a buyer’s day. B2B payment solutions offer more visibility to suppliers ranging from automated notifications to self-service websites. Putting the Supplier in control of their information is a benefit and saves time for both the Company and Suppliers.
B2B payment solutions also offer increased visibility and reporting to Companies. Most solutions have reporting capabilities that allow a Company to easily run Remittance Reports, Spend Patterns, Supplier Analysis, and Exception Reports.
There is no doubt that electronic payments are much more efficient than manual / paper payments. Per Industry experts, it costs roughly $5 in processing for paper checks and upwards $25 for wire payments – while electronic payments costs around $1. Reducing the amount of time tracking payments, processing requests, and making the payment, provides benefits for both the Company and Suppliers. As an added incentive and savings opportunity, some B2B payment solutions offer rebates to the Company depending on the amount of Suppliers signed up or size of the spend.
For a successful Procure-to-Pay environment, the actual payment is a large and critical component. Procurement Teams spend a great deal of effort negotiating payment terms in contracts, and payment processors can play a big role in meeting those payment terms. For companies looking to reduce processing times and create new efficiency savings, B2B payment solutions can be a great alternative.
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